Brasília – The government of Brazil announced on Wednesday (15) the Programme for Investment in Logistics for highways and railways, with the objective of stimulating private sector participation in infrastructure projects in the country. The plan is to transfer 7,500 kilometres of highways and 10,000 kilometres of railways to private companies.
Investment for the coming 25 years is expected to reach R$ 133 billion (US$ 66 billion), being R$ 79.5 billion over the first five years. For highways, the total invested will be R$ 42 billion and, for railways, the investment programme is R$ 91 billion (US$ 45 billion).
According to the minister of Transport, Paulo Sérgio Passos, the duplication of the main stretches of highways and the expansion of the railways is scheduled. In coming weeks, the concession of new ports and airports will be announced.
The model to be adopted to stimulate growth of the railway sector will be that of public-private partnerships (PPPs). The government will concentrate on construction, maintenance and operation. Valec, a state-owned company in the sector, should buy the entire transport capacity of railways and promote the public offering of this capacity, guaranteeing the right of passage of trains on all grids and seeking lower tariffs.
Sale of the capacity will be to users who want to transport their own cargo, to independent operators and to concession holders who may acquire part of the capacity of railways. The construction of the 10,000 kilometres should be concluded five years after the signing of the contracts, which is scheduled to take place from July to September 2013. Before the official announcement, the expectation was for 8,000 kilometres to be granted to the private initiative.
According to the future president of the Planning and Logistics Company (EPL), Bernardo Figueiredo, if there is not sufficient demand to cover the entire capacity of the railway, the government will take on the loss, as the concession holder to build the line will be fully paid for the service.
EPL was established to manage all logistics projects in the country and will replace the recently established High Speed Railway Transport Company (Etav), responsible for management of the construction of the high-speed train connecting São Paulo and Rio de Janeiro.
Financing will be based on the Long Term Interest Rate (TJLP), adopted by the Brazilian Development Bank (BNDES), currently at 5.5% a year, plus 1% a year, with a grace period of up to five years and amortisation in 25 years. For the highways, interest will be TJLP plus 1.5% a year, with grace of up to three years and amortization in 20 years. The degree of leverage for both sectors should be between 65% and 80%.
In highways, the model will also have investment focussed in the first five years of concession. Of the 7,500 kilometres to be granted, 5,700 should be ready in the period. The condition for selection of the concession holder is the offer of the lowest toll fee, to start being charged once the concession holder has completed 10% of the works. The forecast for signing of the several contracts is March to July next year.
With information from the ANBA Newsroom. Translated by Mark Ament
