Brazil's new govt will remain on track with rail and road concessions, PPPs

Bnamericas Published: Wednesday, January 18, 2023
Brazil's new govt will remain on track with rail and road concessions, PPPs

Brazil's government is continuing with its program of concessions and PPPs for highways and railroads and is looking to speed up some projects, reducing private sector fears of big changes in these models by the new administration.

"We want to boost private investment, combining efforts with public funds. The result of this will be better infrastructure for the country," transport minister Renan Filho (pictured) said during a Wednesday press conference to present the government's 100-day plan for his portfolio.

"We're going to organize a series of roadshows with [state-run development bank] BNDES and the PPI [the federal department that structures projects] with private investors to show off our ideas, but I've already said that we're going to accelerate the concessions that are in the pipeline," he added.

Since new president Luiz Inácio Lula da Silva took the reins on January 1, market participants have been calling for clear signs about the infrastructure agenda.

Private sector players were concerned that Lula's government could reverse concessions in certain areas and would also review some regulations created in recent years to encourage private companies to take part in infrastructure projects, instead favoring public investments.

"Today's announcement is a great relief and is very positive, because it shows that, in addition to the agenda of infrastructure concessions being continued, it will be reinforced," Roberto Guimarães, planning and economic director at local industry and infrastructure association Abdib and former head of the national treasury, told BNamericas. 


The minister underlined that the government will no longer consider major changes in the so-called authorization regime currently in place and also will continue pushing concessions in the sector. 

Implemented in late 2021, this regime allows private sector firms to build and operate short-line rail networks using government-owned rights-of-way, avoiding lengthy tender processes.

"We won't make any revision of programs that are in place. What we're doing are some revisions to change certain points and, in the case of the authorization regime, we want to accelerate the period with which these projects are drawn up on paper and start taking place," said Renan Filho.

The minister also said that he wants to resume the plan to offer a concession for the 933km Ferrogrão railway, among other projects, including the publication of the public notice for Lot 7F of the Fiol II project.

"We're convinced that Ferrogrão is a concession that can feasibly move forward with 100% private sector resources, and we're going to talk about this project with the environment ministry, since the initiative requires environmental licensing," Renan Filho said.

The government also intends to stimulate the issue of green bonds to finance rail projects. 

The news about the initiatives going ahead in the rail sector was also warmly applauded by stakeholders. 

"Minister Renan Filho's presentation of his 100-day plan was timely, comprehensive and brings optimism to the freight and passenger rail sector, given its emphasis on railroads. He announced the continuity of all railway projects, showing synergy between the transport ministry and the office of the presidential chief of staff, the PPI, environment ministry and [federal audit court] TCU," Vicente Abate, president of rail equipment manufacturers association Abifer, told BNamericas. 

"In addition, the creation of a national rail secretariat will certainly bring the necessary sustainability to the actions now proposed and those in the future," he added.


With respect to highways, the minister said the government wants to move forward with concessions this year, with two lots of integrated highways in Paraná state, along with the concessions for the BR-38 and BR-040 roads.

At the same time as continuing with the program of concessions, the government also wants to speed up public investments in highways.

"By April of this year we will deliver a total of 861km of paving works on existing highways that are in poor condition, and we will resume works on another 670km across the country. We have already identified a total of 1.7bn reais [US$333mn] of room in our budget for the first [100] days of government to advance with these initiatives," said Renan Filho.

The highway improvement projects set to be concluded include sections of the BR-116/BA, BR-364/AC, BR-101/AL and BR-116/CE roads, among others. 

The government also will finish the construction of 72 bridges and viaducts by April.

The complete presentation by the transport minister, outlining the priority works included in the agenda, can be accessed here.

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