Brazil expected to see multiple passenger rail opportunities

The plans of Brazil’s federal development bank BNDES to structure urban rail projects will likely generate multiple opportunities in the segment.

"BNDES's involvement has great potential to attract both public investment and private capital to projects. It's a fundamental role. Brazil currently has 15 cities with more than 1mn inhabitants, of which only eight have some type of rail transport, such as trains, subways or light rail," Roberta Marchesi, the director of Brazilian passenger transport association ANPTrilhos, told BNamericas.

"Furthermore, we have 28 metropolitan regions that have more than 1mn inhabitants, only 39% of which have rail transport and even in those that have this type of transport it is insufficient to satisfy demand."

Last week, BNDES announced an agreement with the cities ministry to structure urban mobility projects related to subway, train, light rail and bus corridor initiatives, among others.

The bank looks to structure projects in 21 metropolitan regions, including Rio de Janeiro, São Paulo, Recife, Belém, Porto Alegre and Curitiba, along with other cities.

According to ANPTrilhos, with the support of BNDES the country has the capacity to triple its passenger rail network. 

"We at ANPTrilhos carried out a recent survey based on 19 metropolitan regions with more than 1mn inhabitants, where there were projects that at some point were presented to citizens by local governments, and we detected a total of 105 initiatives," said Marchesi.

"If these projects actually materialize, we will have a total of 2,600km added to the rail network. Currently, the total number of passenger rail lines in Brazil is 1,130km," she added, underscoring that with BNDES’s support the chances of advancing those initiatives increases. 

For years, one of the main criticisms of infrastructure investors and experts was the poor preparation of projects which ended up generating risks for private sector players and financiers, both during the development of projects and after they were completed, such as unrealistic estimated user demand.

In 2020, BNDES created the so-called project hub, where it began to structure a portfolio of concessions, PPPs and privatization plans to be offered to investors.

Under the initiative, BNDES has structured and announced details of projects in multiple areas, mainly in sanitation and highways, which saw a proliferation of contracts offered in recent years.  

Currently, the hub includes 183 projects in various segments involving estimated investment of 562bn reais (US$112bn). The project hub can be seen via this link.