Federal Government may pay 100% of the HSR, CEO of EPL said

The government can, at worst, afford 100% of the construction of the High Speed Rail (HSR) connecting the cities of Campinas, São Paulo and Rio de Janeiro. This is a strategic project from the standpoint of the public interest, the CEO of the Empresa de Planejamento e Logística (EPL), Bernardo Figueiredo, said. If the private sector is not interested, I cannot let the public interest relegated to the background.

At the moment, however, this is not the scenario Federal Government works with. The priority is to attract the largest possible volume of private resources for the project. The government is confident that this will happen, because there are countries with high technological level in high-speed trains that currently have idle capacity and seek opportunities. This is the case of Spain, Italy and Japan, for example. I think it is a good investment, that will generate a good return, Figueiredo said.

For the CEO of EPL, it is natural that potential foreign partners of the project have doubts concerning the demand, i.e. on the volume of passengers.

But who observes what happens in the Rio-São Paulo axis, the situation of the air shuttle, cannot have doubt about the market. In order to assuage fears of losses because of low service use, EPL proposed to enter as a partner in the winning consortium, with a 45% stake. Correios also may enter with up to 5% stake.

Funds

In addition, pension funds may participate neutrally. By this criterion, they report how much they are willing to invest and under what conditions, but they do not commit to any consortium before the auction. They enter as a member of the winning group.

Figueiredo said he knows no guidance on the minimum amount to be invested by the funds.

The bullet train project connecting São Paulo to Rio de Janeiro has been studied since 1999. As reported by Figueiredo, the government of Fernando Henrique Cardoso hired German experts to make studies that indicated HSR as a sustainable solution to solve the problem of transportation in the region.

The HSR auction is scheduled for September. The concession will last 40 years. In 2011, after the failure of an attempt to bid the project, the government decided to divide it into two steps. Initially, the operator is chosen.

The idea is to attract an investor who holds the latest technology, which will be transferred to the country. Only at that stage, the planned investments are about $4.03 billion.
In the second phase, the responsible for the civil works will be selected. Given the bureaucratic complexity, which was repelling potential investors, the federal government decided to assume the full risk of this step.

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