An IPO would represent an alternative to privatization of the water utility, which was met with resistance from lawmakers.
The public works minister admitted work on many projects has not started due to inability to close financing.
The auction will take place on Thursday.
Brazil's president-elect intends to attract more private sector investment in infrastructure projects.
The Chilean president did not clarify if the project to be tendered is the same US$1.6bn high speed link presented earlier this year by a Chilean-Chinese consortium.
Offers for the Los Vilos-La Serena stretch of route 5 will now be unveiled on November 30.