Urban transport is China’s next big thing in Brazil

China is taking an increasing interest in Brazil's urban mobility segment through which it establishes sustained engagement in the country.

Manufacturer BYD, for example, through Consortium Skyrail Bahia (which includes Metrogreen), recently signed with Bahia state a public-private partnership contract for building and operating a 1.5bn-real (US$365mn) light rail service in state capital Salvador.

The rail service will link Salvador's commercial zone to the island of São João, Simões Filho municipality. The 20km line will have 22 stations and capacity to transport 150,000 passengers a day.

Crucially, "the project in Bahia is not technically a VLT, it is a monorail. This monorail uses specific tires that only Chinese companies will be able to supply in the future and with this project, the company is arranging a long-term relationship in Brazil,” Peter Alouche, a consultant specialized in the railway segment told BNamericas.

According to Alouche, considering empty public coffers, other cities will also opt for monorails instead of subways. And Chinese players emerge as favorites to win such contracts.

Chinese companies are also counting on the federal government, which even though it is reducing subsidized infrastructure loans keeps them accessible for certain actors.

Last week, Skyrail Bahia received approval for a 642mn-real loan through federal fund Fundo de Desenvolvimento do Nordeste, which offers a subsidized interest rate for the Bahia monorail.

OTHER AREAS 

BYD also seeks to expand its footprint in the electric buses segment. 

The firm expects to sell 100 units in 2019, and eyes 300 in 2020. This positive outlook rests on the efforts of cities like São Paulo to combat pollution and climate change through carbon emission reductions. 

BYD opened an electric bus factory in 2015 in Brazil to capitalize on this market. So far, it has closed a deal over 15 buses for an operator in São Paulo city, which will start operating next month. Other cities with electric bus fleets are Santos, Campinas, Volta Redonda, Bauru and Maringá.

“Many municipalities are establishing quotas for electric buses. Other cities are negotiating with us, so we could hope to see at least 10 cities using electric buses in Brazil by the end of this year,” BYD’s marketing, sustainability and new business director in Brazil Adalberto Maluf told BNamericas in a recent interview.

The president of Paraná state railway concessionaire Ferroeste told BNamericas that “we are 100% open to attract international investors, including Chinese players, to the state railway segment.”

Over the last decade China became Brazil's largest trade partner, surpassing the US, due to the Asian country's hunger for commodities, but interest is now turning toward Brazil's large pipeline of infrastructure projects.