SP Government assumes expropriations of the future Line 6

 A new notice to bid for the Line-6 Orange of the Metro – the so-called university track, linking the north to the center of São Paulo – will be released on Tuesday, according to the state government. After the last attempt to get the bid started failed, on July 30, due to lack of private groups interested in participating in the event, the government decided to yield to some points of concern for the businessmen.

The new configuration provides that the State pay all expropriation and resettlement of 300-500 families. The previous text stipulated that the costs would be divided between the private and the public sector. The base date for calculating the values of the contract has also been changed – from January 2012 to August 2013.

The group of companies winning the bid for the Public-Private Partnership (PPP) of the Line 6 will be responsible for making the executive project of the branch, building the track and buying the trains. In return, the private sector can profit from the operation of the track for 30 years. Part of the money obtained from the movement of passengers is returned to the State – the track should carry 600,000 people per day.

To ensure that there will be return to the investor, the State should authorize the winner of the bidding to begin operation in only an excerpt. The strategy is similar to what happened with Line 4-Yellow: it opened in May 2010 with two stations and reduced hours. The government works with the hypothesis that the first four stations Line 6-Orange be opened at the end of 2017. The entire branch, with 13.3 kilometers and 20 stations, should be ready in 2019.

Meeting. Changes in the notice to bid of the Line 6 were approved on Wednesday by the State’s Management Council of PPPs. The government’s expectation is that the proposals are received 45 days after the publication of the notice to bid and that the contracts are signed until November. If all goes as planned, the works should begin in December, according to the government.

Only with the expropriations, the government should spend about $264 million, according to initial estimates. However, this does not mean that the State will spend more with the project than what has been anticipated, in the opinion of the Secretary of State for Planning and Regional Development, Julio Semeghini, who is also the chairman of the State’s Management Council of PPPs.

We are anticipating investment. The notice to bid provides 30-year contract. We are making an adjustment on cash flow in the track operation period, Semeghini said, explaining that the investment will return to the State over the past three decades. The expropriation is a critical point. Companies are unsafe. They usually do the construction, operate the metro, they are not used to dealing with it.

The State should partner with the Court of Justice in order to expedite expropriations. The proposal is that an expert makes the property assessment. If the resident accepts the value, the State pays right away. If they do not accept, the property price will be challenged in court. As collateral, the State will deposit 80% of the initially set value.

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