Chugging along: Brazil's passenger rail plans

In recent weeks, several Brazilian states have announced initiatives to expand rail passenger transport networks. 

BNamericas spoke with Vicente Abate, president of rail equipment manufacturers’ association Abifer, to understand what is motivating state governments to look more closely at rail passenger transport.

BNamericas: We recently saw the publication of the notice for the purchase of 44 new trains for the São Paulo metro, we are expecting the auction of the Intercidades rail link at the beginning of 2024 and also in Rio de Janeiro, studies have advanced for the construction of line No. 3 of the metro, in addition to the tender for the light rail system in Bahia. What is behind this renewed interest by state governments in passenger transport projects?

Abate: In the passenger area, it’s worth mentioning that we have, in addition to those you mentioned, the forecast for the Aeromovel assisted operation at Guarulhos airport, at the end of the first quarter of 2024. 

[Editor’s note: The Aeromovel assisted operation is a 2.7km light rail link connecting terminals at São Paulo’s Guarulhos airport with the existing rail line.]

Recently, the transport ministry released the draft decree on the national rail passenger transport policy.

In our assessment, the country lacks sustainable urban mobility policies and this is what rail transport can provide.

In the freight area, we’re awaiting the regulation from [regulator] ANTT of rule 1,324, which is the green rail fleet program that will allow concessionaires to acquire environmentally sustainable wagons and locomotives.

BNamericas: Is there greater awareness among governments currently regarding the benefits of public transport compared to the use of cars, given the move to reduce emissions in large cities?

Abate: Yes, as trains emit fewer greenhouse gases, contributing to achieving the UN SDG [Sustainable Development Goals] targets.

BNamericas: Which projects in your view in the area of passenger transport are most likely to advance in the coming quarters?

Abate: All those already mentioned, as they are independent of each other.

BNamericas: In relation to freight rail transport, what are the most important initiatives?

Abate: The creation of the PPI [investment partnership program] by the [Michel] Temer government, in 2016, was extremely important as it allowed for early renewals [of rail concession contracts] and promotes concession auctions.

Within this program, [the concessions] of Rumo Malha Paulista, EFVM and EFC of Vale have already been renewed, all in 2020, and MRS in 2022.

VLI's FCA [Ferrovia Centro-Atlântica] should soon launch its public hearing, closing this development and investment cycle. Rumo Malha Sul is under analysis at ANTT.

The auction for the north-south railway’s central section was won by Rumo in 2019 and is already operational, and the one for FIOL 1, Caetité a Ilhéus, won by Bamin in 2021, is in the due diligence phase. The Ferrogrão [concession auction] is currently being evaluated by the supreme court’s arbitration council.

It's also worth highlighting that the Pro Trilhos program, launched by the [Jair] Bolsonaro government in September 2021, creating railway authorizations, has more than 100 projects, signed and under analysis by ANTT.

The current Lula [Luiz Inácio Lula da Silva] government has supported, in principle, all of these projects.

BNamericas: Are there specific projects in the pipeline regarding freight transport?

Abate: Nova Ferroeste, which runs for 1,567km between Maracaju, Mato Grosso do Sul state, and Paranaguá in Paraná is scheduled for auction on the B3 [Sao Paulo stock exchange] in the first quarter of 2024.

The 1,963km Malha Oeste [west network] between Corumbá in Mato Grosso do Sul and Mairinque in São Paulo will likely be subject to rebidding.

BNamericas: What is the current production capacity of the railway industry in Brazil?

Abate: The annual installed capacity was adjusted in line with the market to 2,000 freight wagons, 150 locomotives and 600 passenger cars.

BNamericas: Are there any regulations pending currently in congress that the rail segment considers vital to promote the industry?

Abate: As already mentioned, we await the regulation of rule 1,324 by ANTT.

A few days ago, congress approved the extension of the [tax incentive program] Reporto until December 31, 2028, and now it is only pending presidential approval.

Finally, we are waiting for congress to evaluate the important topic of resuming accelerated depreciation for equipment, as happened in the 2010s, which would boost the acquisition of wagons and locomotives.