Presidential Decree (MP) No. 845/18, published on July 20, established the National Railway Development Fund (FNDF), with the objective of allocating resources to the national railway system. The FNDF will give priority to the implementation of the stretch between the Port of Vila do Conde in Pará and the North-South Track (EF-151 or FNS). The investments will start in the municipality of Barcarena/PA, per the terms of article 3 of MP 845/18.

Among the sources of income for the FNDF are funds received from the granting of the FNS sub-concession for the strech between the National Port in the State of Tocantins and the municipality of Estrela D'Oeste in the State of São Paulo.

Although MP 845/18 referred only to the granting of the FNS sub-concession, instead of having generically indicated any and all railway concessions and sub-concessions, the solution found by the government releases funds from the concessions of the other railway stretches for other purposes.

If we analyze other regulated sectors, as in the case of telecommunications, we will note that industry funds[1] have already been created without the funds linked to them being effectively used, as has been proposed by the Federal Accounting Court (TCU), for example in appellate decision No. 749/2017 - en banc, in which Justice Bruno Dantas drafted the written opinion. In any case, since the government has already prioritized the construction of the port of Vila do Conde, in Pará, over the FNS, the selection criterion tends to ensure, even if not entirety, its effective use in that stretch.

Pursuant to the terms of article 8 of Law No. 11,297/06, the construction, use, and enjoyment of the FNS was assigned to Valec Engenharia, Construções e Ferrovias S.A. Since MP 845/18 did not change these assignments to Valec and since this entity has the legal nature of a public company, and therefore with its own legal personality, one asks how the relationship between the FNDF and Valec will proceed. This matter may be addressed in the regulation to be issued, since the presidential decree did not govern under what guise the FNDF’s budget will be used by Valec.

The role of the FNDF in the current public policy for the rail sector remains clear: the objective is not only to collect grants in order to offset the investments already made, but also to provide resources for new and strategic rail stretches according to the National Logistics Plan (NLP). The prioritization contributes to directing, without eliminating, the field of action of administrative discretion in the expansion of installed rail transport capacity in Brazil.

[1] Telecommunications Supervisory Fund (Fistel), created by Law No. 5,070/66; Fund for the Universalization of Telecommunications Services (Fust), created by Law No. 9,988/00; and Telecom Technology Development Fund (Funttel), created by Law No. 10,052/00.