Page 82 - InvestmentGuideBrasilEng

RAILWAYS

Privatized in the 1990s, Brazil’s railway network encourage competition and new market entrants The following conditions will apply to conces- Railway concession partners will have access
has suffered from a lack of public investment for in the railway sector, the government has estab- sions for railways: to a BNDES financing line with charges based on
many years. Originally, the railroads were built to lished a public-private partnership model, where- the TJLP plus additional interest of up to 1.0% per
connect Brazil’s coffee-growing areas to the ports by the Brazilian government will award a contract ? Concessionaires will be selected through year, a five-year grace period and a 25-year repay-
during the 19th century, until roads became the to a company under an open tender process to public auctions following a public consultation ment term. As in the highway concessions, BNDES
preferred form of transportation due to a lack of build, maintain, operate and transfer the railway period. The award will be made to the bidder may finance from 65% to 80% of the projects.
investment in rail. Today, the bulk of rail trans- assets (BOOT concession model). that offers the lowest tariffs. In order to reduce For more information on investing in Bra-
portation – which accounts for just 25% of freight The stretches of railway to be auctioned are wide- demand risk (i.e. that initial demand may not zilian railways, visit the Brazilian Logistics &
transportation in Brazil – is dominated by a hand- ly spread across Brazil and intersect with the major be sufficient to enable to concessionaire to Planning Corporation’s website for investors:
ful of companies that have won concession con- rail projects, namely the North-South Railroad, the recoup the investment and obtain sufficient www.logisticsbrazil.gov.br
tracts to operate specific stretches of railroad. To Trans-Northeastern and the West-East Railroad. remuneration), the state-owned railway
engineering and construction firm VALEC will buy Other useful links:
the entire railway capacity from concessionaires.
? www.transportes.gov.br -
? By significantly alleviating risk away from the Ministry of Transportation
private companies, the government believes a
higher number of potential investors will become ? www.antt.gov.br - the overland
active participants in Brazil’s new railways model. transportation regulatory agency

12 ? While respecting the public-private ? www.valec.gov.br - VALEC Engineering,
partnership approach, one of the objectives Construction and Railways
in the new railways model is to reduce
costs for freight and boost the share held
by rail in Brazil’s transportation matrix.
8
? To ensure the continuous expansion
4 7 of Brazil’s railway network capacity, the
RAILWAYS concession contracts will include investment
triggers, which will take effect when the
5
level of railway use reaches certain levels that
1 FERROANEL SP - NORTH RAILWAY BELT indicate the saturation point on a certain
2 FERROANEL SP - SOUTH RAILWAY BELT 9 railroad segment has been reached.
3 PORT OF SANTOS 1 6
4 LUCAS DO RIO VERDE - URUACU 2 3
5 URUACU - CORINTO - CAMPOS 10
6 RIO DE JANEIRO - CAMPOS - VITORIA
7 BELO HORIZONTE - SALVADOR 11
8 SALVADOR - RECIFE
9 ESTRELA D'OESTE - PANORAMA - MARACAJU NEW PROJECTS UNDER EVALUATION
10 MARACAJU - MAFRA IN PROGRESS
11 SAO PAULO - MAFRA - RIO GRANDE EXISTING
12 ACAILANDIA - VILA DO CONDE

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