Brazil readies tender for 500km stretch of railroad

Brazil will hold a public tender to build and operate the first stretch of the Fiol freight railway on Thursday, almost three years since the first studies were proposed by the government office responsible for the privatization program.

The auction will be the second in a three-day infrastructure spree that began Wednesday with the concession of 22 airport terminals and will end on Friday with a tender for five port terminals.

The first stretch of the railroad, from Caetité to Ilhéus, both in the northeast state of Bahia, is 537km long and is expected to bring in 3.3bn reais (US$650mn) in investment, about half of which will be to finish construction. The concession will involve operating the line for 35 years.

The line will connect port terminals to mineral producing areas and, when fully completed, to the country’s grain breadbasket. However, it is not likely to garner much interest, according to specialists, and Bahia Mineracao is expected to be the only bidder for the first stretch.

The infrastructure ministry signed a deal this week with the World Bank to present studies for the second and third stretches of the railroad. These would connect the line with the Fico and Norte-Sul railroads, parts of which are being built by state-owned company Valec.

“At first this railroad will be used for iron ore exports, which are seeing high prices in the global markets now,” infrastructure minister Tarcisio Gomes de Freitas said in a webcast hosted by the country’s stock exchange.

“Progressively, its capacity will be used to transport soybeans to the ports and we’re working on connecting to other railroads, and in the future these freight options will make it cheaper to export our agriculture products.”