Brazil looking to approve urban mobility framework in H2

The Brazilian government and business leaders are expecting the approval of a national framework for urban public transportation in the second half of this year.

"Our framework proposal now is being assessed by congress and the signal we have from congressmen is that it is likely to be voted on and approved in the second half," Denis Andia, urban mobility secretary at the cities ministry, told BNamericas on the sidelines of an urban mobility event.

"The legal framework opens up a new field in terms of the possibility of modeling operations, projects that are currently concession models that have existed for 40 years. The existing model needs to be revised and opened up to other possibilities. The new legal framework will bring legal certainty to new investments, especially in PPP contracts, which are a mechanism that we want to stimulate for projects in the sector," Andia added.

The details of the framework proposed by the government can be seen here, in Portuguese.

According to business leaders, it includes key points to stimulate new projects.

"This framework will provide integration between agents, including federal, state and local governments as well as the industrial sector. Furthermore, the framework opens up room for additional sources of funds for projects and the sector and more legal security too," Vicente Abate, president of rail equipment manufacturers' association Abifer, told BNamericas.

The aspect of financing is a decisive factor in this sector.

"In most countries in the world, urban mobility projects have direct investment from governments. Here in Brazil, this hasn't happened due to the severe fiscal restrictions we suffer. Therefore, we have to create a regulatory framework to stimulate and attract private sector investment," Joubert Flores, president of passenger transport association ANPTrilhos, told BNamericas.

"The rail passenger transport sector in Brazil now transports 8.3 million passengers per day. Before the pandemic this figure was 11mn passengers per day. Faced with this reduction, considering the fact that we don't know when we will actually return to pre-pandemic passenger levels, we need to have a sector that operates more efficiently, with better regulation, to be economically sustainable," said Flores.

The framework, proposed in a bill, seeks to restructure public transportation by setting guidelines, objectives and definitions for the sector to operate existing systems and finance new projects.

One of the key points in the regulation would be to create mechanisms for dialogue between the federal and local governments. Currently, the federal government does not participate in long-term passenger transport models, leaving such tasks to local governments, which often lack the financial resources and technical expertise to structure operating models.

The proposed framework foresees new funding options for operating urban public transport. Possible sources of funding include advertising and naming rights on vehicles and stations or stops, revenues from real estate or commerce at stations and revenue from parking in public areas, among others.

In addition, the framework also seeks to separate infrastructure investments in stations, terminals, equipment and fleets from investments in operating services. Companies currently calculate all expenses to define not only the fares charged to users, but also the amount of state subsidies.