HST will have its cost defined by the winner bidder

With the preparation of a new notice to bid, based on rules completely different from the ones initially planned, the federal government succeeded in exempting itself from one of the most controversial questions of the high speed train project: after all, what will be the total cost of the controversial enterprise to cover the 511 km separating the cities of Rio de Janeiro, São Paulo and Campinas? Now, the private initiative is in charge to providing this answer, as it always criticizes the preliminary studies conducted by the government, and then ignored the three bidding attempts made by the Federal Government for the project.

Yesterday, ANTT (National Agency for Land Transportation) disclosed the draft of the new notice to bid for the bullet train. Now, as stated by Helio Mauro França, Superintendent of the agency, ANTT is convinced that the best proposal model has been achieved.

The notice to bid is complex and will certainly cause a lot of discussions in the open court to be conducted as from September 11th, in Brasília, São José dos Campos (SP), Aparecida (SP), Rio de Janeiro, Barra Mansa (RJ), Campinas (SP) and São Paulo.

During two years, the government insisted in granting the bullet train project to the consortium that presented the lowest fare cost, so as to create a model that would privilege the transport user. However, entrepreneurs were not convinced about the estimated project costs.

While ANTT defended the thesis that it would be possible to deliver the entire infrastructure of the bullet train by $ 17 billion, the companies stated that the work would not cost less than $ 25 billion. If this figure was confirmed, it would be impossible to establish low fares, and consequently, the demand would not justify an investment so high.

Now, the price will be defined by the companies. Until May next year, ANTT is intending to choose the consortium that will hold the high speed train technology and be its operator during the 40-year concession period. The main novelty of the auction is the formula to be used to choose such consortium.

In the new notice to bid, the former criterion based on the lowest fare has been discarded. Now, two criteria will be combined. The auction winner should be the consortium that is willing to pay the highest value (grant) by km traveled, while presenting the lowest estimated cost for the construction of the whole enterprise. By combining these two scenarios, the agency will make a technical classification of the proposals in order to choose the most interesting one for the Federal Government.

This means that, to compete for the project concession, the company should indicate its reference cost for completing the entire infrastructure, informed the ANTT Superintendent. This value will consider exclusively the technology to be used by such company, which is a factor that directly affects the total project price. Thus, we believe in receiving very competitive proposals.
In order to be qualified for the auction, the companies must provide a detailed business plan and the functional project of the enterprise. These studies should indicate the estimated costs for the major civil works of the bullet train, which should consume near 80% of the whole investment required. The project tracing should require, for example, the construction of approximately 100 km of tunnels, bridges and viaducts.

In spite of the radical change in the notice to bid, ANTT was able to keep as general rule the maximum fare price for a trip in economic class between São Paulo and Rio de Janeiro. The maximum cost by kilometer traveled should not exceed $ 0.24. For practical terms, this means that a trip between the two capitals should not cost more than $ 99. However, it must be weighed the fact that such fare considers the bullet train projects prepared in 2008 by ANTT. Upon the effective operation start-up of the bullet train, this fare will be reviewed according to the IPCA index.

From now on, the companies interested in competing for the enterprise, which has the intention of being the largest infrastructure project in Brazil, must struggle in order  to submit their business proposals until April 30th, 2013 in the BM&F Bovespa Stock Exchange building, downtown region of São Paulo. The opening of the business proposals is scheduled for May 29th.
Once selected the bullet train operator, which will be a consortium with the state-owned company Empresa de Planejamento e Logística (EPL) as one of its partners, ANTT will start the preparation of the executive engineering project for the works, and then conduct the second auction of the project, which should select the consortium that will build the enterprise.

Once started the works, this second consortium will have a maximum deadline of 60 months to finish them. According to França, by 2020, the bullet train will be totally operational. However, there is a forecast for anticipate the operation start up of sections, as soon as they are delivered.

Fonte: Economic Value