In September, BNDES approved four credit transactions for three different companies in the rail sector, totaling almost half a billion Brazilian Reais for the revitalization of lines, maintenance of equipment, and purchases of new railcars and machinery. This measure is in line with the new governmental policies and directives for the promotion of the railway sector, which, since 2007, when the North Section of the North-South Railroad was subject to a sub-concession, has been suffering from a lack of consistent privatization projects.

For example, the Logistics Investment Plan (PIL), launched in 2012, provided for R$ 91 billion in investments in a package of ten thousand kilometers of railway line to be built on 12 different routes. The model failed because of both the inability to prioritize and regulatory uncertainty: open access and separation of infrastructure and transportation activities, with take-or-pay remuneration by Valec, was not convincing, and therefore none of the projects got off the drawing board. PIL II, in turn, launched in 2015, was more conservative. Based on the previous model of vertical exploration concession, it provided for four thousand kilometers of rail lines concentrated in only four projects, which as of today have not yet been executed.

The Investment Partnerships Program (PPI), inaugurated by Law No. 13,334/16, incorporated the four priority projects of PIL II, but with important regulatory differences and differences in trajectory. Combined with Law No. 13,488/17 and the National Logistics Plan (NLP), approved in 2018, the PPI finally presented the minimum conditions for railway projects to be executed through administrative processes consistent with our legal system. Concern with the logistical diversification of means of transport, and especially with national railway development, intensified due to the recent truck drivers' strike, which, in turn, gave more traction those administrative processes.

Essentially, the PPI signals to the market the government's strategy to promote the development of the national rail network through investments in prequalified projects contemplated in PNL Scenario 2025, which proposes the construction of 3,200 kilometers of railroad lines provided for in the Advance Partnerships Program, which are:

  1. Sub-concession of the EF-151-Rail North South (FNS-TC) line, which links Estrela d'Oeste/SP to Porto Nacional/TO. The FNS-TC line was recently approved with some recommendations and determinations by the Federal Audit Court (TCU), which when met by the ANTT may trigger, in 2018, publication of the public bidding notice;
  1. Sub-concession of the EF-334-Rail West-East Integration Railway (FIOL) line, an important corridor for the southern part of the state of Bahia, which links Caetité/BA to Ilhéus/BA. Currently, the FIOL line is in the process of public consultation to receive support and contributions to the technical, legal, and economic and financial documents published by the ANTT; and
  1. The concession of the EF-170 (Ferrogrão) line, which links Sinop/MT to Itaituba/PA, and which was submitted for public consultation and now awaits the publication of a report by the ANTT.

At the same time, the PPI considered strategic the expansion of the capacity of railroads already granted via concession to the private initiative. In these terms, based on the terms of Law No. 13,488/17, the extension anticipated for some railroads whose concessionaires have requested extension of the term in return for additional investments is in an advanced stage. Such additional investments may occur not only in the network itself, but also in those of interest to the Public Administration, with the PPI and MTPA having made use of this legal permission to pre-qualify the Central-West Integration Railway (FICO) and the São Paulo Rail Beltline also as priority projects.

The strategic planning provided by the PNL, the system for prioritization of projects by the PPI, and the publishing of appropriate legal frameworks have raised the government's decision to promote the development of the national rail network through new investments, particularly private ones, to a higher level of viability and seriousness. In order for the pace not to be lost, the challenge for the next government will be to expand the range of railway projects, rather than to concretize those already pre-qualified, which will require schedule discipline, modeling quality, attractiveness to private investment, and, above all, commitment to Brazil's international competitiveness and participation.