São Paulo Subway is going to launch PPP

The first PPP to be offered to the investors in Brazil will be in the subway system. Still in October, according to secretary of Metropolitan Transport of São Paulo, Jurandir Fernandes, the São Paulo Company of Partnerships, anautarchy from São Paulo State recently created to manage these contracts, should summon public audience to introduce the project for the supply of 29 trains of six cars and part of the signalling and telecommunications for the Line 4 of the São Paulo Subway, that started to being dug at the beginning of  the second semester. The adopted modeling requires 27% of private participation, equivalent to 340 million dollars and 73 % of participation of  the São Paulo State. “We start with 50 % of privarte participation, but the internal rate of return indicated that we could not go beyond 27 % to attract investors”, said Jurandir.

The modeling also foresees a reduction in the demand risk, where the state is going to cover 60 % of the loss generated by passenger movement inferior in more than 10 % to what was projected in the study. As it was already seen in the previous experiences of concession, the commonest mistake is to esteem a demand above reality to make the business attractive. “Of course superior demands in more than 10 % to the foreseen generate an equivalent compensation for the state”, adds Jurandir.

The foreseen demand for the initial stage reaches 900 thousand passenger per working day. Other warranty is that the remuneration to the investors will be corrected by IGP-DI (official inflation index)  and not by the tariffs increase, frequently subjects to political factors. Finally, and for relief of the market, all the free tickets will be totally supported by the state.

The Line 4 of the São Paulo Subway – Yellow Line — will link the Luz Station to Vila Sonia, in the west zone of the capital, through 12,8 km and 11 stations. In the first stage six stations will be built, including Faria Lima, and in a second, five more. Fourteen trains, of the fleet of 29, are destined to the first stage and 15 to the second.

Fonte: Folha de São Paulo