Railways – BRL 25 billion in investments are expected if the bill is approved

The new legal framework for railroads can unlock new projects and investments; the bill has been stalled in the Senate for 3 years

If approved by the Senate, the new legal framework for railways could result in investments of R$25 billion. If approved in the coming months, the bill, which has been on hold since 2018, will go to the Chamber of Deputies and could move forward with several projects, such as the construction of railways by companies interested in connecting new destinations and reducing transport costs.

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The Railroad Bill

The text of the bill allows the construction of railways through an authorization system without competition procedures. Currently, the operation of the model by the company requires a bidding process, which results in concessions. This format will continue to exist, and the choice of system will depend on the business model.

Estadão/Broadcast sources informed that there are four axes that are being discussed between people linked to the railway sector and the government, which could be developed if the new railway legal framework is approved by parliamentarians.

Since 2018, the bill has been stalled in Senate and should be approved in the coming months, after analysis by the Chamber. In recent years, people have been waiting for a new law that would allow the private sector to build railroads of interest, thus stimulating the development of some projects.

Projects that can develop

The railroad that intends to connect the mining town of Sete Lagoas to São Mateus, on the coast of Espírito Santo, in which Petrocity Portos will operate a port terminal in the state, is one of the projects that can be unlocked with the approval of the legal framework for railroads. The company hopes to build a 560-kilometer railroad between the two cities, with estimated investments of R$ 6,5 billion. The branch already has a name: Estrada de Ferro Minas-Espírito Santo.

According to José Roberto Barbosa da Silva, CEO of Petrocity, there are high hopes for the railroad's potential. He stated that this route will reduce the time needed to transport different types of goods and tackle the idleness of industries that cannot produce more products safely due to logistical problems.

Grão Pará Multimodal, which is authorized to operate the Alcântara port terminal, in Maranhão, also plans to build a 515-kilometer railroad – Estrada de Ferro do Maranhão – with an investment of R$ 6,2 billion (if the bill of the new railway framework is approved). The first stretch, 215 kilometers long, will run between the terminal and the city of Alto Alegre do Pindaré, and will connect with the Carajás Railroad (EFC), operated by Vale. In the second stage, the group plans to build another 300 kilometers to connect the North-South Railroad.

Increase of existing railways

If the bill is approved, the new railroad operating model may also facilitate the expansion of routes by companies that already operate branches under a franchise regime. An example is the approximately 700 kilometers to connect Rondonópolis to Lucas do Rio Verde, in Mato Grosso.

At least R$ 8 billion will be needed to build a railroad, which is important for transporting agricultural production. The branch will connect to Malha Norte, operated by the company Rumo, which together with Malha Paulista will form a corridor to the port of Santos, on the coast of the state of São Paulo.

Another project that may result in the expansion of existing railroads with the approval of the bill is the Arco Luziânia (GO) -Unaí (MG) -Pirapora (MG), which rural producers in the region have been charging for years to capture agricultural demand in Minas Gerais. in the west of the state of Minas. The value of the investment is estimated at approximately R$ 4,9 billion. VLI, the company that operates the Ferrovia Centro-Atlântica, was identified as a potential investor in this area.