Government negotiates with mining company to review concession contracts; according to the minister, the value should exceed R$10 million
The minister Renan Jr. (Transport) said that negotiations with Vale for the renewal of the railway concession contract should culminate in an agreement worth over R$10 billion. According to him, negotiations should be finalized by the end of this year.
The statement was made in an interview with CNN Brazil which will air this Saturday (August 17, 2024). The broadcaster released an excerpt in which the minister states that the money will be added to that from other concession contracts, such as Rumo and MRS. The amount should be used in a national plan for railway development.
Renan Filho said that this plan will be “credible” as it will bring a list of new works in the sector and specified sources of resources.
“Brazil has already done a lot of plans without sources. But they never come to fruition, because they need the resources to invest.”, declared the minister. “There is no point in making a plan saying which railways we are going to build if the government does not put anything in place. [de investimento]. Because almost no railway in the world is built solely with public resources”, he added.
In a statement to the market published in June, Vale said it was discussing with the Ministry of Transport the general conditions to optimize investment plans in the concession contracts for EFC (Estrada de Ferro Carajás) and EFVM (Estrada de Ferro Vitória a Minas).
The contracts “are regularly executed by Vale under the terms established and disclosed to the market on December 16, 2020”, the company highlighted in the document. The statement is a response to a report by State about Vale’s railway concessions.
At the end of 2020, Vale renewed its two railway concessions for 30 years. At the time, the federal government was led by then-president Jair Bolsonaro (PL) and had the current governor of São Paulo, Tarcisio de Freitas (Republicans), in charge of the Ministry of Infrastructure.
According to Renan Filho, the concession values agreed with both Vale and other concessionaires were low.
“They devalued public assets”, he stated. “I am working to close the deal and turn the page. Vale has already made a proposal and the government is working on doing the math.”, he added.
HIGHWAYS
In addition to reviewing the railway contracts with Vale, Renan Filho said that the federal government intends to hold 12 or 13 highway auctions in the coming months.It may not be possible to carry out all the auctions within the year, but what we are experiencing in Brazil is the largest cycle of road auctions in our history.”, he declared.
On August 29, Planalto will try once again to close the concession for a 304 km stretch of BR-381, between Belo Horizonte (MG) and Governador Valadares (MG).
This will be the federal government’s 4th attempt to bid for the highway. Last year, the president Luiz Inácio Lula da Silva (PT) joined the list of Executive leaders frustrated by the concession of BR-381. Before, Dilma Rousseff (PT) and Jair Bolsonaro (PL) tried to bid for the highway, but were unable to attract interested parties.
BR-381 is one of the most challenging concessions for the federal government. It is known as the “highway of death” because of the high number of accidents and deaths on the stretch full of winding curves, slopes and hillsides at risk of collapse.
“We have made some changes that will be crucial to the success of the auction.“, stated Renan Filho. The first of these is the removal of 2 urban lots at the exit of Belo Horizonte, which are urban lots.
“It is very difficult for the private sector to move families, to resettle families to carry out urban projects. We are bidding and the Dnit itself [Departamento Nacional de Infraestrutura de Transportes]the government will do this work“, he said.
“In addition, two other changes were fundamental. The first is that we mitigated risks. We reduced geological risks and demand risks in the region. This gives the private sector more security. And another very important thing is that we increased the internal rate of return of this project, because it is wrong to auction projects with different risks and the same rate of return.”, he added.
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