Brazil to pump US$140mn into Transnordestina railway

The Brazilian government will inject an additional 800mn reais (US$140mn) to advance construction of the Transnordestina freight railroad in the country's northeast, a regional development ministry spokesperson told BNamericas.

That sum will be provided after the government auctioned a portion of shares in northeast investment fund Finor, administered by regional development bank Banco do Nordeste.

With a total length of 1,753km, the Transnordestina railway is designed to connect the port of Pecém in Ceará state and Suape port in Pernambuco, as well as linking part of Piauí state.

Phase 1 of the works, which totals 1,209km and will connect Eliseu Martins in Piauí to Pecém, is 72% complete.

The government's funding for Transnordestina is part of efforts to unlock investments in railways through a national plan to be launched in the coming weeks.

With the plan, the government aims to draw up a series of frameworks for contracts and to map priority projects that will receive public and private investments.

"For years, there has been a mentality in Brazil in favor of road transportation, which led the country to not invest in rail projects. Little by little, this mentality has been changing, with efforts to structure projects in the sector in a more coordinated way," Ana Patrizia Lira, a former director of land transport regulator ANTT, told BNamericas.

"The progress takes time to be perceived because it will occur through a joint effort between the public and private sectors. We still have significant bottlenecks to overcome for the advancement of projects, such as improvements in project development, the slowness of licensing processes, and also the financing of these projects," added Lira, who is currently the executive director of passenger rail association ANPTrilhos.

Freight rail operators also face challenges in terms of project construction costs due to the lack of a specific mechanism for the segment.

Currently, the government budget for railroad projects uses a road cost system known as Sicro, with a database of prices and unit compositions used by the transport and infrastructure department (DNIT) as a reference for infrastructure works. Its use is required by the audit court when the government launches bids to contract public works.

But the system is more suitable for roadworks than freight rail works, which causes distortions in the budget structure of projects, resulting in delays in approvals.