AGONY ON RAILS

A second-hand train struggles to move across the city. It horns, but nobody listens. It’s a frail train, the remains of a railway system that was once pioneer in Central America, but was dismantled by political decisions taken more than three decades ago. This is the story of how Costa Rica turned its back on a train, and condemned urban mobility to chaos.

A second-hand train struggles to move across the city packed with cars and trucks. It horns, but nobody listens. It’s a frail train, the remains of a railway system that was once pioneer in Central America, but was dismantled by political decisions taken more than three decades ago. This is the story of how Costa Rica turned its back on a train, and condemned urban mobility to chaos.

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Nationalisation

How did we miss the chance to have a modern train?

Costa Rica had a train crossing from coast to coast on a largely electrified railway line. It was a train with capacity to handle cargo and passengers. It was a service that disappeared because of political and financial decisions taken in the 80s. Popular belief points to the government of José María Figueres Olsen (President of Costa Rica 1994-1998) as the one responsible for stopping the train. However, prior to it’s closure in 1995, the railway system received key strokes during the administrations of presidents Luis Alberto Monge (1982-1986) and Óscar Arias Sánchez (1986-1990), when the needed resources were denied and prevented the train from borrowing to finance its modernization. This is the story of how the country lost its opportunity to modernize the train and instead reduced it to the old train cars that hardly move today around the city and the Caribbean.

From coast to coast

1965

In the mid twentieth century the country’s rail network included the Pacific Electric Railway that was property of the State; the Atlantic Railway, operated by the British Northern Railway Company and the Southern Railway, under direction of the United Fruit Company.

Nationalisation

1972

After some worker strikes of the Atlantic Railway, Costa Rica’s president, José Figueres Ferrer, marked the country´s railroad destiny on January 5th:

"You have a new employer now. We will transform the Northern into a Costa Rican company".

The nationalisation, 18 years ahead of schedule in the concession contract with the Northern Railway Company, exempted the company from delivering the railways in good condition. The event was more circumstantial rather than a conviction of having this means of transport for the development of the country.

Nationalisation

1972

Once nationalised, the government did not know what to do with the train and entrusted it to the Junta de Administración Portuaria y de Desarrollo Económico de la Vertiente Atlántica [Port Administration and Economic Development Board of the Atlantic Watershed – Japdeva, for its acronym in Spanish]. Nevertheless, the organization did not have the experience to manage railways. In the case of the Pacific Railway, its administration was transferred to the Instituto de Puertos del Pacífico [Costa Rican Institute of Pacific Ports –Incop, for its acronym in Spanish].

Nationalisation

1976-1978

“Japdeva’s administration ruined the little that remained of the railway. Conditions made it impossible to work, without economic or technical resources, nor work equipment.”

La Nación, October 26, 1976.

“According to Gonzalo Castillo, current general master of railways, employee of the railway for 44 years, Japdeva was dedicated to usufruct the profits of the railway, without investing to improve it.”

La Nación, October, 1978.

Jorge Palma, Operations manager
Atlantic Railway.

Short-lived funding

1977-1978

Given the poor management of the railway by the port entities, during Daniel Oduber's government the company Ferrocarriles de Costa Rica [Railways of Costa Rica, Fecosa, for its acronym in Spanish] was created, to manage them. Oduber also wanted to give the train system a financial boost and saw the solution in the banana industry; an activity that for so many decades had sustained the railway business.

For the railway, in 1978, legislators approved a $0.2 tax per box of banana exported.

Short-lived funding

1978-1982

With those new resources, the octogenarian Atlantic railway network finally received the opportunity to renew itself. During the government of Rodrigo Carazo, 138 km of roads between Limón and Río Frío were rebuilt and electrified, 15 locomotives and 320 train cars were purchased.

That was the last big investment the railway got.

Short-lived funding

1982-1986

Luis Alberto Monge’s government stopped tax transfers to the railway. Just a year after the electrification in the Atlantic was inaugurated, authorities suppressed some passenger trains because they were not profitable. At the same time, the International Monetary Fund (IMF) set a limit to the institution’s deficit, which forced it to reduce costs.

“In the Central Government settlement negotiations with the International Monetary Fund it has been established that the deficit of this company can not exceed ¢130 million in 1983; which forces us to apply a stronger policy of expenditure rationalization in all fields of Fecosa's activity. Relevant studies should be made to reduce the number of passenger trains, since the biggest operational deficit comes from that service”.

"In the Central Government settlement negotiations with the International Monetary Fund it has been established that the deficit of this company can not exceed ¢130 million in 1983; which forces us to apply a stronger policy of expenditure rationalization in all fields of Fecosa's activity. Relevant studies should be made to reduce the number of passenger trains, since the biggest operational deficit comes from that service".

Minute of Fecosa, 21 February 1983.

Short-lived funding

1982-1986

The archives of Fecosa, and later of Incofer, collect dozens of steps taken by its managers asking the government for the resources of the ‘banana’ tax.

“I have sent 13 communications to officials of the Executive Branch exposing the seriousness of the economic and financial problems of Fecosa, without getting any solution to this serious problem, despite the law that assigns a $0.20 tax per box of banana exported for the operation and improvement of the State railways. Until 1983, the government owes to the institution ¢841 million (the equivalent today to ¢38 billion)”.

President of Fecosa, Guillermo Lara Bustamante, in the session of March 20 1984.

Short-lived funding

1982-1986

Concurrently, the State decided to bet on road infrastructure and railway investment was relegated. Until today, the resources addressed to road building and maintenance exceed by billions those assigned to the railway.

Law only on paper

1981-1989

For others, the way to save the railway was to create a new institution to manage it: the Instituto Costarricense de Ferrocarriles [Costa Rican Institute of Railways –Incofer for its acronym in Spanish]. The bill was presented in Congress in 1979. In that moment, there were legislators who did see the train as the driving force for the country’s development.

Legislator Tobías Vargas Rojas,
speech in the Congress on 12/5/1981
(Voice of: José David Guevara)

Law in vain

1985

On September 1985, the law to create Incofer was approved, establishing the electrification and reconstruction of the whole railway network within three years. To this end, it authorized the institute to borrow directly with the support of the State. These credits had to be approved by Congress in no more than three months, and if the legislators did not discuss the proposal on time, it would be approved automatically.

Law only on paper

1985

The newly created Incofer started an ambitious modernization plan, but shortly after, it was stopped. Luis Alberto Monge’s government had no plans to modernize the train.

"It has been known that the Minister of National Planning, Mr. Juan Manuel Villasuso Estomba, in his recent trip to the Federal Republic of Germany, told KFW officials, that, in the national development plan, the projects of national railways had no funding priority".

Minutes of Incofer from October 29, 1985.

Law only on paper

1986

Despite the government’s opposition, the railway authorities got three offers of credits for the railway.

Law in vain

1986

However, when the funding was ready, on August 13, 1986, the new government of Oscar Arias limited the indebtedness of some institutions, including Incofer. Modernization of the railway network was forgotten, as well as the plan of the first urban metropolitan train.

"…Before starting any credit application, the detailed information of the project to be financed must be presented to the Ministry of National Planning and Economic Policy with the objective that the Ministry evaluates the project’s economical and social benefits for the country, its priority within the National Development Plan and the technical feasibility of it’s implementation".

Minutes of Government Council, August 13, 1986.

Download the Minutes here.

Oscar Brenes, former operational president and former president of Incofer

Law in vain

1987

Just like the Arias government, the international agencies considered the railway a loss-making company and called for it’s restructuring. The train had no choice but to cut expenses.

“The best we can do is to forget about the $0.2 tax per box of banana exported, because the government wants to use that money to solve fiscal problems and considers a waste to give it to this institution. The country is negotiating with the World Bank a loan for $200 million and, if Incofer does not reduce its deficit, the Bank will have as a condition to close the railway.”

José María Figueres Olsen, board member of Incofer in the session of July 22 1987.

Law in vain

1989

The Railway cut 553 positions, removed 15 passenger trains, closed 15 agencies, reduced electricity expenses and increased the transport income.

“However, sir Minister, despite the big efforts that the Railway has done, the financial situation is very critic, so we are forced to request the resources that by law correspond to us (banana tax).”

Francisco Nicolás, President of Incofer 1989. Letter to the minister of Finance, Fernando Naranjo.

Óscar Arias's government did not listen.

In 1995, president Jose María Figueres Olsen arrived to finish the task that several governments had begun: put a lock to a railway with more than a century of history.
Years later, the train was reactivated operating at minimal capacity, as an alternative to tackle traffic chaos. However, the lack of political support has prevented the railway from getting back on track.