Inter-American Development Bank (IDB) Group member IDB Invest has approved a $500m financial package for the construction and maintenance of Central Railroad line in Uruguay.

The project encompasses the rehabilitation and construction of a 273km rail line between Uruguayan capital Montevideo and the city of Paso de Los Toros.

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With a term of up to 17 years, the IDB invest financial package comprises a senior loan of up to $440m and a subordinated loan of up to $60m.

The total funding will be provided by IDB Invest and a group of commercial banks and international investors.

“With a term of up to 17 years, the IDB invest financial package comprises a senior loan of up to $440m and a subordinated loan of up to $60m.”

The Central Railroad line project will be executed as a public-private participation contract between Uruguay’s Ministry of Transport and Public Works and Grupo Vía Central, a special purpose vehicle created to deliver the project.

The funding by IDB Invest will be used to build the road, establish the signalling system and build 66 bridges, as well as overpasses, sewers and other associated drainage structures.

Additionally, it will enable construction and equipping of 264 level crossings and connecting the line with three additional existing rail lines.

Once complete, the railway project will facilitate connectivity between the interior regions of Uruguay and Montevideo.

Primarily, the line will support freight movement supporting the Uruguayan exports. It will also support the transport cargo for the UPM pulp mill.

Furthermore, the financing is expected to encourage additional investments to support the private sector.

IDB Invest operates as a multilateral development bank focusing on the economic development of Latin America and the Caribbean countries.