North-South expansion shall have public hearing in November

The government intends to perform during this month a public hearing which shall discuss the concession of North-South Railway section between the cities of Anápolis (GO) and Três Lagoas (MS). According to the Brazilian Department of Transportation, the technical studies have been concluded. After the public hearing, the material shall be dispatched to the Federal Court of Auditors (TCU) which is responsible to permit the public notice publication.

As Valor Econômico found, the studies executed by Zeta Engineer and afterwards improved by the Logistics and Planning Company (EPL), pointed to a minimum investment at the order of BRL 2.5 billion only for construction of the section infrastructure between Três Lagoas and Estrela D’Oeste city, in São Paulo countryside. The figure, however, may reach BRL 3.5 billion, according to technicians involved in the project. Even though, the purpose is that the cost do not exceed BRL 10 million per square kilometer which is considered reasonable by the government. The connection between Três Lagoas and Estrela D’Oeste shall have, according to studies, 285 km of extension.

In addition to the construction of this section, the winner concessionaire shall have to invest on the extension between Estrela D’Oeste and Anápolis, operated up to date by state company Valec which is 90% under execution.

The acquisition of undercarriage material (trains and wagons) and other costs associated to the railway operation are also included at the account. There is no official estimate for total investment, but the amount should exceed BRL 4.9 billion announced in June by President Dilma Rousseff.

According to what is forecasted on the Program for Investments in Logistics (PIL), the almost 900 km which separate Anápolis and Três Lagoas are going to be conceded by the vertical system, meaning, the same company which is going to build the infrastructure is also going to operate the railway. The government schedule forecasts the section auction to happen on the first half of 2016.

North-South previous planning forecasted a different tracing. The extension which leaves Estrela D’Oeste towards South would end in Panorama, state of SP, which is close to Três Lagoas. Both cities are at the margin of Paraná River and are part of an important agro-industrial pole which production could be drained by tracks towards the major ports of the North area of the country.

A study concluded by Valec in 2012 estimated costs at the order of BRL 890 million for construction of 264 km of tracks between Estrela D’Oeste and Panorama. The amount is almost three times lower than the minimum designed to take the railway to the neighbor Três Lagoas.

The government is also working on the concession of the railway north section. Two weeks ago, the Brazilian Department of Transportation received the studies of the construction works of the connection between Açailândia (MA) and Barcarena (PA). The company which is going to build this section, budgeted in BRL 7.8 billion, shall also be able to manage the extension between Anápolis and Palmas, built by Valec and opened in 2014. The arrival of the railroad in Barcarena shall allow transshipment of cargo in the Port Complex of Vila do Conde.

When President Dilma launched the first version of the concessions package in 2012, the sections Açailândia-Barcarena and Estrela D’Oeste-Três Lagoas were already at the list of projects. The private initiative did not show interest. For the companies, individually, these two allotments had low financial feasibility: they demanded a big investment and had uncertain potential of load movement. What buried the plans for good was the general skepticism with Valec transport capacity purchasing model.

Combining new sections and concluded or well advanced ones, the government intends to make more attractive the entire construction of the two new North-South extensions. The idea behind the strategy is to ensure the concessionaires almost immediate income with the operation of the concluded sections.

Besides the North-South, the government wants to turn feasible the concession of the named “Soybean Railway”, which connects the cities of Lucas do Rio Verde (MT) and Campinorte (GO). The railway studies have already been approved by TCU, but the shortage of interested parties barred the progress of the bidding procedure. The section integrates the tracing of polemic Bioceânica Railway, which promises to cross throughout the South American continent connecting Atlantic Ocean and Pacific Ocean, on Peru coast.

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