INTERNATIONAL BUSINESS : Mexico Makes Plans to Expand, Privatize Port of Ensenada : Trade: The $200-million proposal includes a new rail link that could steal some business from L.A., Long Beach ports.

In a bid to improve Mexico’s strategic role in international commerce, President Ernesto Zedillo is to announce in Ensenada today a $200-million plan to privatize and expand the city’s port, complete with a pivotal 70-mile railroad link to the United States.

The plan for Ensenada, now mainly a tourist stop for Southern California weekend revelers but long thought to have great potential as a Pacific Rim cargo center, will include Baja California’s first container-handling facility and a new passenger cruise ship terminal, sources in Zedillo’s government said.

Mexico will not pay for the development itself, but will instead seek private investors in what marks the latest phase of privatization for Mexico’s state-owned transportation facilities.

To that end, officials will present the Ensenada plan in Japan and on Wall Street in coming weeks to drum up interest. Mexican companies are expected to bid as well, possibly as leaders of investor consortiums taking in railroad, real estate or other interests.

Ensenada’s primary attraction for commercial transportation firms could be its proximity to the 800 or so maquiladora plants on the Mexico side of the U.S. border that stretch from Tijuana, across from San Diego, to San Luis Rio Colorado, near Yuma, Ariz. Ensenada is about 70 miles south of Tijuana.

Foreign-made components sent to the maquiladoras for assembly are currently shipped mainly through container ports in Long Beach and Los Angeles, as are finished goods heading out to international markets.

The rail link and container-handling facilities would enable Japanese and Korean manufacturers, for example, to bypass congested Long Beach and Los Angeles port facilities and use Ensenada, a shorter haul by truck or rail that would also let shippers avoid crowded U.S.-Mexico customs stations.

The port would probably remain too small to take significant business away from Long Beach and Los Angeles, but it could develop an important niche in serving maquiladoras. It would also make border investment more attractive to foreign companies.

The key part of the proposed complex is the railroad linking the expanded port with the Mexican national railroad in Tecate, Mexico, and from there to rail grids throughout North America. The railroad element is expected to cost $150 million, three quarters of the new port’s price tag.

The railroad’s developers will have to secure rights of way for 70 miles of track, an expensive proposition under any circumstances.

Bidders seeking the rights to develop and operate the container cargo facility will also have to bid on construction of the railroad element, sources in the Mexican communications and transport ministry said.

Several consortiums that include Japanese and U.S. transportation- giants have long had their eyes on Ensenada, waiting only for the federal government to make it available for private development.

The plan calls for the Ensenada container cargo-handling facility to include three giant cranes capable of lifting shipboard containers from oceangoing vessels and placing them on railroad flatcars or truck trailers, Mexican officials said.

The plan also envisions the relocation and expansion of Ensenada’s cruise ship terminal in a bid to attract more pleasure craft. Further, there would be retail development along the Ensenada harbor front. Also included in the new privatization package are Puerto Vallarta and Acapulco passenger port facilities, the bidding for which was opened last week.

Earlier this year, Mexico privatized port facilities in the cities of Lazaro Cardenas, Veracruz, Manzanillo and Altamira. Another nine federal facilities are scheduled for privatization in the next year or two, sources said.

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Port Expansion

A $200 million plan to privatize and upgrade the Mexican port of Ensanada includes a 70-mile rail link to California.