Paraná state requests authorization to privatize rail company Ferroeste

Brazil's Paraná state is planning to privatize public rail company Estrada de Ferro Paraná Oeste (Ferroeste), operator of the Ferroeste railroad, and has requested authorization to do this from local lawmakers.

"The main objective is to boost investment in the railways, reduce logistics costs for the productive sector and support the expansion of cooperatives and agricultural production in Paraná in the coming years," the Paraná government said in a statement.

"The gains also include the potential reduction in fossil fuel consumption and accidents on highways, the development of the state's economic matrix and the strengthening of foreign trade, all of which are included in the multiannual plan, as well as a reduction in political interference and an increase in revenue," it added.

Once approved by legislators, the state government said that it will commission a study to identify the best model for the privatization process, which will likely be carried out via an auction on the country's B3 stock exchange in São Paulo state.

The state is looking to publish the notice for the privatization within 18 months.

Paraná currently controls 99.6% control of Ferroeste and the rest of the shares belong to 46 national companies, three international firms and six individuals. Estrada de Ferro Paraná Oeste manages the 248km section of lines between the cities of Guarapuava and Cascavel. 

For years, the state government has been trying to advance with plans to expand Ferroeste, connecting grain producing areas in Mato Grosso do Sul state with Paranaguá port, but it has failed to make much headway.