Brazil ups railway investment forecast under new rules

The Brazilian government has raised its investment estimate for the railway sector, after a recent decree seeking to increase investments from private companies. 

The decree signed by President Jair Bolsonaro at the end of August authorized private firms to build and operate short-distance freight rail lines under rights-of-use to be issued by the government. Previously, companies interested in operating or investing in railways had to compete in a tender process that could take years.

After the decree was published, the government said it expected 53.5bn reais (US$10.2bn) in investments through 10 projects. 

That projection has now been revised upward to at least 60bn reais as the number of projects have increased to 12, said infrastructure minister Tarcísio Freitas in a press release.

Freitas also said that recently awarded railway concessions and others underway represent additional investments of 30bn reais.

MINING SECTOR IMPACT

The increase of railway investments is likely to benefit the mining sector, according to some experts.

"The mining segment in Brazil has a very large potential for diversification and the expansion of the railway network and improvement of the port infrastructure is key to unlocking investments in new mining projects, mainly in unexplored and remote regions," Paulo Guilherme Coimbra, an infrastructure, energy and natural resources partner at professional services firm KPMG, told BNamericas.

Coimbra mentioned as an example the recent concession of the Fiol railway in northeastern Bahia state, which was assumed by mining firm Bahia Mineração and is likely to help expand the state’s mining industry.