The federal government intends to use the anticipated renovation of the railway concessions which expire at the next decade in order to finally dust off São Paulo Ferroanel. One of the country’s most important logistics projects, the billionaire venture is fundamental to remove the load trains from the network operated by Companhia Paulista de Transportes Metropolitanos (CPTM) (São Paulo Metropolitan Train Company) which has been postponed since the beginning of last decade.
The underway negotiations put the construction works as a counterpart to the agreement extension of the MRS Logistics, which expires in 2026, for 30 years.
This is the third attempt, with different models, of turning Ferroanel viable. In 2008, the idea was a partnership between federal and state governments in order to turn the project financially viable with participation of MRS – the company which detains the network where the rail contour would begin and end. The plan has never been carried forward. Later on, President Dilma Rousseff included the venture at the Program for Investments in Logistics (PIL), launched in 2012. The right to use the tracks purchasing model by state company Valec, however, has been rejected by investors and did not enable its progress.
Currently, the intention is to include Ferroanel as one of the major construction works negotiated with the railways concessionaires in exchange of its agreements expansion. The negotiations opening for anticipated renovation of concessions has been announced last June during the launching of the second phase of PIL, but without any details.
A commission has been created at Land Transport National Agency (ANTT) on October 29th to deal with the subject. Besides MRS, Latin America Logistics (ALL) and Central Atlantic Railway (FCA) have already formalized requirements for contractual expansion.
Ferroanel North section, 52 kilometers long, has preliminary estimation for investments above BRL 2 billion. There is no updated number. In one of its last versions, the project would link Campo Limpo Paulista (from where the trains coming from Campinas area arrive) and Engenheiro Manoel Feio (towards port of Santos). Nowadays, the compositions which transport grains and ore circulate on a restrict schedule, especially overnight, in order to avoid interfering on CPTM passengers’ trains network.
In addition to Ferroanel, dozens of construction works such as patios and municipal contour are under negotiation. The government plan is to make an amendment of 30 years to the current concessions. In exchange, the companies would have to undertake with two types of investments – direct and indirect. The first group of investments involves construction works agreed with the Federal Union. The second group of interventions would be necessary to meet future quality goals for services provision which the government intends to include on the agreements.
The list should have indicators of productivity and reduction of accidents, for instance. The concessionaires shall be free to establish exactly what to do in order to comply with the goals, but this certainly shall demand big disbursements.
According to a government employee involved in the discussions, maybe in many cases, the concessionaires do not need 30 years to amortize the new investments. In this event, one of the possibilities is to charge a burdensome granting to close the economic financial balance of the contractual amendments. That money, if the model of contractual amendments is closed in the coming months, could enter the National Treasury cash in 2016. There are no estimations about values.
However, the concessions renovation procedure could take several months. It is still necessary, for instance, to fix the internal rate of return (IRR) to the railways additional investments. In the railways case, segment to which a formula to expand contractual terms in exchange of new construction works is being adopted, ANTT has defined a compensation of up to 9.9% for the investments.
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