Redesigned, HSR is analyzed by various foreign groups

Four foreign companies confirmed their interest in the contest to Reuters: Japan’s Mitsui, France’s Alstom, Canada’s Bombardier and Spain’s CAF.

The first phase of the bullet train auction, scheduled for May 29, 2013, is already causing a movement by the interested in providing the technology and operating the system that will connect the cities of Campinas, São Paulo and Rio de Janeiro.

Four foreign companies confirmed their interest in the contest to Reuters: Japan’s Mitsui, France’s Alstom, Canada’s Bombardier and Spain’s CAF.

The director of Mitsui in Brazil, Kazuhisa Ota, said the company is forming a consortium with other major Japanese companies such as Toshiba, Hitachi and Mitsubishi Heavy Industries, which would have the role of leading the technological part of the group.

According to the executive, the change in the model of bidding, which separated the operation and infrastructure of the high-speed rail (HSR), was welcome. The vision is that now the foreign companies holding technology are less exposed to the risks of the project’s civil work.

This new modeling solves a lot of things and makes things easier, Ota told Reuters.

The CEO of CAF in Brazil, Paulo Fontenele, agrees with him. The civil construction risk was ruled out since the government took on the risk… We are following (the auction) with great composure.

Spain’s CAF and Renfe will form a consortium to participate in the first phase of the dispute, and the group should have Brazilian partners. We are working, and our studies are ready. We are putting together a consortium from Spain, Fontenele said.

According to him, all the rolling stock to be used if the consortium is the winner will be supplied by CAF, which already has a coach plant in Hortolândia (state of São Paulo). We want to make (the trains) in Hortolândia, and we are currently analyzing a plant expansion.

France’s Alstom said that there is a team totally dedicated to the analysis of the whole package of conditions in order to have a precise positioning on the project.

Alstom intends to continue its partnership with the French national operator SNCF and, within this scope, Alstom and SNCF reaffirm their interest in the project and will continue to discuss this with their stakeholders… in order to help bring the technology of high-speed rails to Brazil, the company said through its press office.

Another company eyeing the auction is Canada’s Bombardier, which has been closely following the process for few years and will announce the model of its possible participation in a proper moment.

For Bombardier, the HSR linking the two largest Brazilian urban centers is essential for economic and social development of the region. The company estimates that the access between Rio de Janeiro and São Paulo reached the limit of the available means of transportation.

According to a government source who follows the topic, the bullet train auction also attracts companies from South Korea and Germany, in this case represented by Siemens.

When contacted, Siemens said it would not comment about it. The German railroad operator Deutsche Bahn said it has no interest in acting as operator on the project. However, its consulting and engineering group, DB International, operates in Brazil on projects such as the optimization of SuperVia operations, in Rio de Janeiro.

DB International is not a builder or operator, it assumes professional consulting or control functions in certain phases of construction projects… There may be an advisory role in the consortium in the future, the company said.

The bullet train auction should have occurred in December 2010, but the auction was postponed until April 2011 and then until July of that year.

As no company or consortium had delivered proposal on that occasion, the government changed the bidding model, dividing the project into two parts.

Doubts

President Dilma Rousseff is enthusiastic about the project, which has total investment estimated at $16.62 billion and is a priority in the Brazilian Growth Acceleration Program (PAC – Programa de Aceleração do Crescimento).

The final version of the notice to bid for the auction of the first phase of the bullet train has not yet been released, so some doubts persist about the rules that will allow or not the presence of some foreign groups in the competition.

For the choice of the bullet train operator, the government included some qualitative requirements, such as the need for the operator to be in operation  with high-speed transport service for at least 10 years and to not be liable by any fatal accident in its tracks during that period.

We have to know what the definition of ‘accident’ is. Is it a running over? We will only know when the notice to bid is released, said the professor of the transport department at the Polytechnic School of the University of São Paulo (USP), Telmo Giolito Porto.

According to a government source, who declined to be identified, the new rules leave out a potential Chinese operator for the Brazilian project.

The internal rate of return of the project must be of 6.32 percent per year during the concession period of 40 years. The draft of the notice to bid also sets a ceiling rate of 0.49 real per kilometer traveled, to be charged in coach class on the 412-km trip between the cities of São Paulo and Rio de Janeiro.

The criteria for choosing the winner of the auction will be the best ratio between the amount of grant offered by the investor and the lower cost of investment that this operator requires for the construction of the railroad infrastructure.

The infrastructure auction is planned for early 2014. The deadline for the bullet train construction, according to the draft of the notice to bid, is 2020. But the government’s goal is to have the work completed in 2018.