ABIFER NA MÍDIA – Brazil railway investments largely depend on private sector

Brazil’s railway sector is increasingly dependent on private investments, forcing the government to develop mechanisms that ensure the inflow of capital.

Public investments fell to 364mn reais (US$67mn) in 2020, compared with 577mn reais in 2019, or 4.4bn reais in 2010, according to the latest figures from transport confederation CNT.

While private investments totaled 7.2bn reais in 2010 – 63% higher than public investments – they soared to 10 times public contributions by 2019.

“The ideal would be to have a major balance between public and private investments in the sector, but we know that budget restrictions do not allow this,” Vicente Abate, president of national rail equipment manufacturer association Abifer, told BNamericas.

According to Abate, the government should take advantage of private engagement to reinforce public finances during the next five years, after which private investment will start falling and the government could step in again.

EARLY CONCESSION RENEWALS

The government is using early concession contract renewals to encourage investments.

Mining firm Vale had its Carajás (EFC) and Vitória-Minas (EVM) railway concessions early renewed for another 30 years. Vale has been operating the routes since 1997 and the contracts would have expired in 2027. The company will invest up to 24.7bn reais during the new contract period.

In May last year logistics firm Rumo signed an early 30-year renewal of the Malha Paulista concession. Rumo will invest 6bn reais in the railway and it paid 2.90bn reais in fees to the government.

The government is also holding a public consultation for the early renewal of the Ferrovia Centro-Atlântica (FCA) railway concession. The process will run through February 19.

The original contract has been in force since 1996 and expires in August 2026. The concession is operated by logistics company VLI, whose shareholders include Vale (29.6%), Brookfield Brasil Infrastructure (25.5%), Mitsui & Co (20%), and others.

The 7,215km FCA crosses seven states and transports mainly soybeans, iron ore, sugar, corn, steel, and bauxite. Transport volume in 2019 was around 30Mt.

PROJECTS PIPELINE

About 300mn reais of public investments last year went to building a 537km stretch of the Ferrovia de Integração Oeste-Leste (Fiol) railway, whose auction has been penciled in for April 8.

The stretch connects the cities of Ilhéus and Caetité in Bahia state. Known as Fiol 1, the 35-year concession will require investments of up to 5.4bn reais, according to the infrastructure ministry.

The other railway project expected to advance this year is the 69-year concession for the planned 933km Ferrogrão railway, which is expected to be auctioned in the first quarter, despite potential roadblocks.

Ferrogrão figures among the country’s largest infrastructure projects and demands investments of 8.4bn reais. It is part of infrastructure ministry efforts to increase the role of railways in the transport matrix. The line will connect Sinop city in Mato Grosso state and Miritituba, an important port on the Tapajós river in Pará state.

Fonte: BNAmericas

Data: 08/02/2021