06.05.2021 | ABIFER | Notícias do Mercado
Bnamericas – 03/05/2021
Brazil’s railway segment still offers major opportunities, despite structural issues and the pandemic‘s impacts.
The government is pursuing plans to facilitate private investments in lines that connect major commodity-producing states.
“The agenda of concessions and renewals of contracts started to gain strength in 2020 and this should translate into major demands for wagons and rails from 2022. Currently, the industry that serves the sector still operates with a high degree of idleness,” Vicente Abate, president of national rail equipment manufacturer association Abifer, told BNamericas.
Concessions for the three biggest railway projects – Fiol, Ferrogrão and Fico – are expected to generate combined investments of over 25bn reais (US$4.6bn), resulting in a 1,889km expansion of the network and 45,380 new jobs, according to a study by state-owned logistics planning company EPL.
The government is betting on these projects to increase the participation of the railway sector in the cargo transport matrix.
Highways dominate the matrix with 67.6% while railways account for 21.5%.
“In Brazil, in addition to these obstacles that are inherent to the sector, we still have unevenness and a discontinued railway network, composed of three different types of gauge, which makes inter-regional integration difficult,” EPL said via a study.
“Brazil, among countries of similar sizes, is the one that least uses the railway system for cargo transportation, with percentages of utilization inferior to Russia, Canada, Australia, the US and China,” it added.
The largest project in the pipeline is the 933km Ferrogrão railway concession, expected to generate capex of 21.5bn reais, according to EPL.
The railway will connect the grain-producing state of Mato Grosso and Miritituba port in the Amazon, crossing Pará state. The government is planning to auction the 69-year concession this year.
The project is controversial as opponents, including some local legislators, highlight environmental issues linked to the project.
The other two projects are in more advanced stages.
In April, mining company Bahia Mineração won the 35-year concession for a 537km stretch of Fiol between Caetite and Ilhéus.
Bahia Mineração is expected to invest 3.3bn reais to finish construction and start operations. Annual capacity is expected to reach 50Mt by 2035.
In addition, mining giant Vale is building part of the Fico railway from Mara Rosa to Água Boa as part of a deal to get its EVM rail concession extended, which connects the iron-ore producing areas of Minas Gerais and Victoria port.
Works involve a 383km extension and capex of 2.73bn reais.
PASSENGERS TRANSPORTATION
Urban railway transport faces different challenges due to falling passenger numbers because of the pandemic.
Companies in the sector posted massive losses last year and operators will keep struggling as local governments are reimposing social distancing measures amid a slow vaccination roll-out.
Passenger volume declined 46.7% and companies registered a combined 2020 loss of 8bn reais, according to passenger railway transport association ANPTrilhos.
São Paulo state’s metro will auction this week naming rights to some stations in response to falling revenues.
The state expects to raise 1bn reais by allowing companies to slap their brands’ names on initially six stations.
São Paulo is also evaluating a concession for the entire leasable area to install stores in certain stations.
“The objective is to increase non-tariff revenues and reduce expenses to carry out the work,” Folha de S. Paulo newspaper quoted transport secretary Alexandre Baldy as saying.
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