Government may ensure demand in HSR

In addition to afford the currency risk, the government is considering other measures to attract investors for the bullet train project between Campinas and Rio. One of the mechanisms under study is to provide a minimum guarantee of demand. With this, if the number of passengers does not reach the official estimate, the federal government would pay the concessionaire for the difference.

In a way, the demand guarantee mechanism already existed in the failed bid for the bullet train in July. The difference is that, at that time, the government admitted to revise the interest on the Brazilian Development Bank (BNDES) financing if demand does not happen. Now, the trend is to ensure the resources of the missing demand. Another mechanism under consideration involves ensuring that the concessionaire will not have losses if there are delays in the bid schedule.

Estimations recently updated by the British consultancy Halcrow estimated at 8.8 million the number of passengers (6.8 million in coach class and 2 million in business class) in Rio-São Paulo route in 2020. The figure does not take into account the regional services, such as São Paulo-Campinas and São Paulo-São Jose dos Campos. The demand between the two capitals is expected to increase to 14.3 million passengers in 2030, 22.1 million in 2040 and 29.3 million in 2050.

Finally, the government assesses a way to ensure the future concessionaire will not have losses if there are delays in the schedule of the following bid stages. After the lack of offers in the auction of July, the government decided to change the bid of the bullet train and divide it into three phases, by separating technology and operation companies from those that will be responsible for civil construction.

Now two concessions will be made. In the first one, the train technology and the service operator consortium will be chosen. In the second step, the constructor consortium, which will perform the work, will be chosen. The winner of the second bid (constructor group) will be required to open an international competition for different work stages.

The government is studying a way to compensate the operator consortium if the following stages delay, since the period of 40 years of concession would be running. One alternative under consideration is to extend the term of the concession if it occurs, but the hypothesis of some financial compensation is not totally discarded.

With the cancellation of the injunction blocking the resumption of the bid process, two weeks ago, the National Land Transport Agency (ANTT) will schedule a new round of public hearings to discuss the notice to bid. The hearings should take place between January and February, in seven cities: those cities where there will be bullet train stations (São Paulo, Rio, Campinas, São José dos Campos, Aparecida and Barra Mansa) and Brasília.

The government ensures that it will make the bid for the first phase in 2012, probably early in the second half. After the winner is set, then the train executive project will be designed, and then a company to take over the civil construction will be considered, which should only occur in mid-2013. Successfully, the bullet train would be completely running around 2019.

The bullet train project is being updated by the inflation rate. The total value of the project that will connect the cities of Campinas-São Paulo-Rio de Janeiro will rise from the old US$ 18.73 billion to about US$ 21.65 billion. The fare in coach class, first estimated at US$ 108.26, will increase to between US$ 129.91 and US$ 135.33.