Brazil adopts new framework for railway authorization model

Brazil’s transport regulator ANTT announced a new framework for the railway authorization model in an attempt to unlock investments.

In 2021, the previous Jair Bolsonaro administration created the authorization regime, allowing private sector firms to build rail lines in specific areas of interest.

Despite several project announcements, the move failed to generate major investments.

Now the government, under President Luiz Inácio Lula da Silva, has announced new rules in an attempt to advance.

"The model provided for in the railways legal framework, established in September 2021, allows the private sector to design, build and operate rail projects in the country with its own resources. The adjustments approved now aim to increase legal certainty for contracts, as well as guarantee the viability of proposals from those interested in investing in the railway sector," the transport ministry said in a statement.

Unlike under previous rules, it will now be mandatory for companies to provide more technical information to assume contracts for railway infrastructure, as well as the presentation of the technical, economic and environmental feasibility study (EVTEA) by interested parties.

"The EVTEA must be seen as an element of proof that the object of the award included the minimum technical studies necessary for its implementation, since the risks, in the case of railways operated under a private regime, are fully assumed by the proponent," said ANTT head Felipe Queiroz.

In addition, the new framework includes the obligation for interested parties to report the transport capacity of the future railway and the technical and operational conditions of the infrastructure.

The Brazilian government has tried for years to unlock investments in railways but due to fiscal restrictions has sought to attract private companies and admits there are challenges ahead.

"It is difficult to actively attract private investors to railways, like we are advancing in road projects, because projects in this segment take more time to generate cash, which is why the government's participation with public resources is necessary, at least at the beginning of the projects," transport minister Renan Filho said in a recent interview with BNamericas.