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The federal government is about to restore more than 11 km of abandoned tracks and generate R$20 billion in compensation. Will the country finally be able to revitalize the railway sector and reduce its dependence on highways?
The Brazilian railway scenario is about to undergo a historic transformation.
After years of stagnation, the federal government is determined to revolutionize the country's railway network, focusing on recovering abandoned tracks that represent a significant portion of the sector.
The big question, however, is how the concessionaires, which currently control these railways, will be compensated, and where the resources for this ambitious initiative will come from.
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More than 11 thousand kilometers of tracks are inoperative, spread across several regions of Brazil, and this puts the country's logistical growth at risk.
According to information from the National Land Transport Agency (ANTT), the government is already preparing to begin the gradual resumption of 11,1 kilometers of railways that are currently abandoned.
Currently, 36% of the country's entire railway network is inactive or under-used, a reflection of poor management and the lack of interest of concessionaires over the years.
The current concessionaires will have to return these sections to the Union and pay compensation that could bring in around R$20 billion for the public coffers, resources that will be reinvested in the sector.
Abandoned railways are in the hands of transport giants
These unused tracks are under the control of three large companies that have taken over parts of the old rail network nationally in the late 1990s.
The Rumo concessionaire holds the largest number of inactive sections, with around 4.900 kilometers of railways paralyzed.
Among these, there are 3.400 kilometers belonging to Rumo Malha Sul, 900 kilometers to Rumo Malha Paulista, and another 600 kilometers to Rumo Malha Oeste.
This abandonment is not an isolated phenomenon and affects other large companies such as Ferrovia Transnordestina Logística (FTL), which has 3.000 kilometers unused, and Ferrovia Centro-Atlântica (FCA), controlled by VLI Logística, with another 3.000 kilometers stopped.
The concessionaires claim that many of these railways were not in adequate operating conditions at the time they took over the concession.
Rumo, for example, stated that it maintains constant dialogue with the government to seek solutions and return these inoperative sections.
In turn, FCA reported that the return is part of a process of early renewal of the concession, and that each returned section undergoes a technical analysis with the government.
Compensation could generate up to R$20 billion for modernization
The impasse over the return of these abandoned railways has always revolved around the compensation that companies must pay the government.
According to ANTT technicians, calculating compensation was one of the biggest challenges faced over the years, as concessionaires argue that they did not receive modernized sections.
However, according to an audit by the Federal Court of Auditors (TCU), a reference value was defined after years of negotiations, based on an agreement for the return of sections of Rumo.
Each kilometer of unusable railway could generate compensation of R$1,5 million to R$2 million, depending on the complexity of the case.
This value is considerably lower than the cost of building a new railway, which today ranges between R$15 million and R$20 million per kilometer.
In other words, for the concessionaires, this compensation represents a more financially viable solution than the investment needed to revitalize the sections.
In total, the compensation could reach the sum of R$20 billion, an amount that will be essential for reinvesting in the Brazilian railway sector.
The impact of abandoned stretches on Brazil's logistics
The abandonment of more than a third of the national railway network has generated a cascade effect on cargo transportation, increasing dependence on highways and, consequently, logistical costs.
According to ANTT data, stretches of very low use also account for waste.
More than half (57%) of the railway network has a daily traffic of less than two trains (round trip), an alarming number for a country that depends on efficient transport for the flow of grains, minerals and other products.
Plans to modernize and expand the railway sector
The resumption of abandoned railways is not just a process of return and compensation. The federal government, together with ANTT and the Ministry of Transport, is developing a plan to modernize the sector.
This includes new concessions, modernization of returned sections and investments in technologies that make rail transport more efficient and sustainable.
According to Davi Barreto, CEO of the National Association of Rail Transporters (ANTF), the sector sees this situation as a unique opportunity to expand the rail mode in the country.
The expectation is that, with the injection of R$20 billion from the compensation payments, Brazil will be able to increase the efficiency of its railway network and reduce its dependence on highways, which would bring enormous economic and environmental benefits.
Barreto emphasizes that the railway sector can gain strength if resources are applied effectively in investments that modernize the railway network.
Challenges and next steps
By the beginning of November 2024, ANTT's technical area must complete a detailed report on how the abandoned sections will be returned.
The process has already undergone public hearings and discussions with government technicians, concessionary companies and sector experts.
Details on how each section will be priced and returned should be released soon, along with a timetable for modernizing the railways that return to federal control.
With this initiative, the federal government takes an important step in the search for a more efficient railway network, essential to boost Brazil's logistical development.
The big question now is: Will this effort be able to modernize the railway sector in time to meet the demands of an increasingly industrialized and globalized Brazil?
In Brazil, everything is expensive and railways are the most efficient means of transport, but they are also the most expensive to build and maintain. The government should follow the example of the US in how they build, use and maintain their railways. The difference is huge…
Regarding the comment above, I have the same opinion. The government has to learn how to manage its own interests, because it is not that difficult, our country is a marvel of wealth, but unfortunately everything is being heard down the drains and is unfinished, we ourselves are tired of seeing it out there, so there is no excuse if you want, everything could be done, railways are our heritage and have our money and so much so that they need to be preserved...
He's trying to find a way to profit from construction work, since most of the tracks have houses on them.
This misguided idea from the 80s of passing the railroads to the private sector. The same one that controls road freight. It was an absurd mistake. The guys didn't invest anything in the railroads. They let everything go to waste. In fact, the move was exactly to close many of them to have more road transport and generate more profits in this sector and its affiliates.
The right thing to do would have been to invest heavily in this sector, maintaining the old railways and building new ones. We are talking about a 50-year delay.
Exchanging highways for railways, I'm sorry, but those who know know that railways per kilometer are more expensive than building a highway, but they are more profitable because a train wagon is equivalent to three 75-ton trucks, and with 400 wagons you need three locomotives with six employees, while with trucks, trailers you need 1200 trucks with at least one driver for each, which greatly damages the roads, with much higher maintenance costs and greater risks.
IT'S NEVER LATE, THE PORTO ALEGRE TO URUGUAIANA LINE COMPLETELY ABANDONED BY RUMO, BETTER TO RETURN IT URGENTLY!
I also agree, if they can't handle it, hand it over to the person in charge again. What can't happen is what is happening now, leaving everything abandoned and serving as a home for homeless people, posing a risk to the population.
What is the source of this information?