Back on track: What next for the US$10.5bn Rio-São Paulo high-speed train

The long-running ambition of building a high-speed train between Rio de Janeiro and São Paulo can finally become reality thanks to Brazil’s private sector.

During the administration of president Dilma Rousseff (2011-16), the government tried to move forward with the project but those efforts failed due to a series of issues, including fiscal restrictions.

Bernardo Figueiredo, former director general of land transport regulator ANTT, was initially named by Rousseff to lead the project and he is now back at the helm as head of TAV Brasil. The company obtained the rights last year from ANTT to advance with the project under the country’s authorization regime, and in this interview Figueiredo gives BNamericas an update on the current status and future plans.

BNamericas: What is the project's current investment estimate and what are the financing strategies?

Figueiredo: Our investment estimate is now at 60 billion reais [US$10.5bn].

We’re trying to bring engineering, procurement and construction firms to our project that can also arrange financing solutions, as the biggest project risk is in the civil works and engineering parts, which are the most complicated to finance.

I believe that hiring international EPC firms, who have experience in this type of construction and can also bring support from their respective governments with more attractive financing and conditions, will be the best way to finance the project.

BNamericas: What is TAV Brasil?

Figueiredo: TAV is a group of consultants and lawyers specialized in the railway and infrastructure segment, who came together to structure this high-speed train project. And now we’re in the phase of searching for the project’s investors.

BNamericas: What are your expectations for licensing and the start of works?

Figueiredo: We expect to obtain the preliminary license for the project at the end of 2026. 

Our expectation is to begin construction in 2027 and complete the project and begin operating in 2032.

The high-speed train is a project that was awarded to the private sector last year and we created TAV Brasil to implement the project.

So, now we’re in the licensing phase and we've signed agreements with several municipalities where the train will pass, defining the location of the stations and also the possibility of integrating it with the urban transport of those cities.

BNamericas: How long will the line be?

Figueiredo: It will be 418km and connect the city center of Rio de Janeiro with the Agua Branca neighborhood in São Paulo. 

By law we could change the line’s route by up to 50%, but I don't see a need for this. With this route it will take one and a half hours via direct express train, without stops, but we will also have the option of a train with intermediate stops, making the journey longer. The train’s speed can reach 300km per hour.

BNamericas: Why is this high-speed train viable now but not in the past?

Figueiredo: I was in charge of the original project when it was a federal government initiative, and I can say that there was never a lack of interest from private investors.

We had seven years of participation with active conversations from international investors from all around the world, and there was an international consensus that a train line connecting Rio de Janeiro with São Paulo was a classic case of a high-speed train project.

Now the project has returned via a different model, through the authorization regime, without the participation of the federal government.

The railway authorization regime created mechanisms that support the attraction of private sector investments to rail infrastructure.

It's a private sector project that does have some difficulties because we don't have the experience of building this type of infrastructure privately here in the country. 

So, it's an unprecedented experience but the regime offers incentives that make me believe the project will move forward. What will guarantee this project coming to fruition is our work.

BNamericas: What aspects of the regime make you confident?

Figueiredo: It provides a concession period of 99 years, with the possibility of extending it for another 99 years. 

So, it’s a project that we view as having been awarded in perpetuity, which is important for the private investor.

The regime allows us to expropriate areas along the route to make urban changes and also generate real estate development to help pay for the project.

The expropriated areas won't be transferred to the government but will be the property of the project investors, giving these investors the freedom to undertake additional business.  

There’s very little regulatory interference in a contract like this under the regime. 

These elements are the key ones that make me believe that we can now move forward with the project.

BNamericas: What will be the passenger demand and the cost of the fare?

Figueiredo: We expect to transport 30 million passengers annually, in a market that has more than 100mn trips per year. 

Editor’s note: The 100mn figure is for current travel by plane, car and bus.

So, we’re aiming to potentially take over 30% of the existing market.

We will have two different ticket prices, one that’s more in line with what bus trips cost and the other more in line with plane ticket prices.

The price for an express trip, without stops and with a service equivalent to planes, will be around 500 reais. And for trips with stops in cities and a service level similar to buses, the price will be 300 reais.