Brazil's North-South railway to be auctioned early next year

The Brazilian government is to auction the section from the municipality of Porto Nacional, Tocantins state, to that of Estrela D'Oeste, São Paulo, of the country's North-South railway. The auction is slated for February next year. The construction works on the railway will be conducted by Valec, the state-controlled firm in charge of Brazil's rail infrastructure, by the third quarter next year. The winning company will operate the stretch for 30 days, which may be extended for another 30.

The public hearings on the auction will have their notice published in the National Gazette sometime this week. They will be held in Goiânia, Goiás; Palmas, Tocantins; Uberlândia, Minas Gerais; in São Paulo, and Brasília.

The bid notice, in turn, should be published on November 14, after a review by The Federal Court of Accounts (TCU). The government is expected to raise $451 million with the auction, with the investment from the winning company estimated to total $903 million.

“We're [aiming at] the appropriate environment for regulation and competitiveness, so people can get organized, carry out their studies, prepare their bids, and put an end to that craze for results at the blink of an eye,” said Moreira Franco, Secretary-General of the Presidency.

International groups, he said, already show interest in participating in the bidding process. The topic should be taken to President Michel Temer for discussion during his official trip to Russia, scheduled for the next days.

Demand

The railway's potential demand for cargo in the beginning of the subconcession period is estimated at 1.2 million tons, which may rise to 8 million tons by 2020. At the end of the concession, the stretch may add up to 25.8 million tons, most of which soybeans and iron ore.

The section to be auctioned is 1,547 km long and will run through the northern state of Tocantins, stretching across Goiás and reaching Estrela D'Oeste, in São Paulo. In Porto Nacional, the section is to open access to the port of Itaqui, in the state of Maranhão, through the north. In Estrela D'Oeste, the section is to be linked to the São Paulo network, bringing the North-South railway to the port of Santos and the economic and industrial centers of São Paulo.

The purpose of the policy for railways will be the connection with ports. “The goal is to conjoin the railway and the port. It should always run towards a port.”

“We're putting an end to this trend of building railways to serve political and electoral demands. They'll have to go from port to port now,” he said.

One of the stretches of the railway, that from Porto Nacional to Anápolis, Goiás, is already operational, but shows little traffic of cargo. The subsection from Ouro Verde de Goiás, also in Goiás, to Estrela D'Oeste is currently under its conclusion and implementation phase by Valec, and is expected to be finished by the late in March or April next year.

Translated by Fabrício Ferreira