Contractors competing to attend the bid auction

Less than one month before the date for delivery of the business proposals, the manufacturers of high-speed trains are fiercely competing to make agreements with contractors so as to make feasible their participation in the bullet train bid. On July 11, the government receives the envelopes from the interested consortiums. On July 29, the proposals will be opened.

The five largest contractors of the country (Camargo Corrêa, Odebrecht, Andrade Gutierrez, OAS and Queiroz Galvão) are in the center of the discussions. None of them are willing to comment the subject. Negotiations occur every day, and among the train manufacturers there is a strong perception that such companies will join forces in the dispute for the bullet train connecting the cities of Campinas, São Paulo and Rio de Janeiro. No one believes that such project can advance without the joint performance of these companies, states the director of a multinational manufacturer. This helps to dilute the risks in a project of such size.

Valor magazine raised the information that, few days ago, these five contractors attended a meeting with Bombardier representatives, in São Paulo. In principle, the Canadian manufacturer was working only with the possibility of selling its equipment to the auction winner, that is, the company would not enter as a partner in the business. But now, Bombardier is open to the idea of entering as a direct investor in the enterprise.

The greatest difficulty faced by the train manufacturers is related to the dimension of the responsibility to be assumed by becoming an associate of the project. “We intend to participate, but we cannot be exposed to the same risks assumed by a civil construction company. Our participation in the project is limited to 15%. Responsibilities must be taken into account,” states the CEO of another manufacturing company, which prefers not to reveal his identity.

The Korean consortium, indicated as the preferred one in the dispute for the project until last year, is being restructured yet. Before the first postponement of the auction, in November, the Koreans were the only group formed with a proposal on hands. But, their local partners for civil construction left the consortium. Today, after two postponements of the bid, the Asian competitor still did not close any agreement with local contractors. In the backstage, an information was provided that the group would be weakened and under risk of not attending the contest. This version is denied by Paulo Benites, representative of the Korean consortium. “We are sure to have the best offer and will deliver our proposal on the scheduled date,” he said.
On the government side, it is expected the publication this week of a number of changes in the bullet train notice to bid, such as the flexibility of locations for the construction of stations and adequacy of the technological transfer processes, , which will be conducted under mutual agreement between the government and the construction consortium.

In the last days, there were rumors on the possibility of a new postponing of the bid auction. The government denies any intention to do that. “We did not receive any request for postponement and the negotiations are in an advanced stage. We are sure that the auction will occur,” said Bernardo Figueiredo, General Director at ANTT (National Agency for Land Transportation).

The high-speed train budget is estimated in R$ 33.4 billion by the government, but the market calculates the HST budget will cost more than R$ 50 billion. The notice to bid has provisions for financing from the BNDES amounting to R$ 20 billion. Other R$ 3.4 billion would be provided by the Federal Government to the governmental company Etav, created to bear the costs with expropriations and studies. The winner consortium must disburse something like R$ 3-4 billion to conduct the works in the first years. The bidder that present the lowest fare for the trip between São Paulo and Rio, in economic class, will win the auction. The maximum value established by the government for the fare is R$ 199.00 for this leg.