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Tren Casimiro at Posada
The Tren Casimiro at Posada, Argentina. The train is a former Dutch Railways DMU.

The first railway in Paraguay opened in 1861 between Asunción and Trinidad, a distance of about 4km. It was not, as claimed by some, the first railway in Latin America (that was in Cuba), nor the first railway on the South American continent (that was in Guyana).

The new Paraguayan line was originally built to Iberian (1675mm) gauge, but, after the line reached the national border at Encarnación, it was regauged to standard (1435mm) gauge to allow through running with the North Western Railway of Argentina. The network was never very extensive; by the 1990s it consisted of around 440km of line. By the turn of the century, all operations had ceased.

In 2002, a concession was awarded to a private company to restore services for passengers and freight. About 6km of line were reopened from Encarnación to a border connection with the Argentinian network. The line closed again in 2010 as a result of the rising water levels of the Yacyretá dam which would flood the route. A 7.5km replacement line was constructed on a different alignment. It was completed in 2012, freight services resumed shortly afterwards and a passenger service was inaugurated at the end of 2014.

At the northern end of the main line, a tourist steam train sevice was established between Botánico station in Asunción and Aregua, a distance of about 25km. However, a bridge collapse in 2009 caused services to be discontinued.

In 2018, tenders were invited for the construction and operation of a 44km tram-train line from Asunción to Ypacaraí, following the existing FEPASA route.

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