Classified as the most transforming project in transport infrastructure today, the new Legal Framework for Railroads had its basic text approved by the Chamber of Deputies this Monday, 13, by symbolic vote and under opposition from left-wing parties. The advancement of the matter gives security to potential railway projects that involve R$ 150 billion in private investments.
The deputies will analyze in another session the suggestions for changing the text (highlights). If any changes are approved, the matter will need to go back to the senators’ analysis. Otherwise, it can go to presidential sanction.
The main new feature of the legal framework is to release a new railway system in the country, called authorization. In it, new layouts are built exclusively for the interest of the private sector, without bidding. Very common in countries like the United States and Canada, the model was created to meet specific demands for cargo transportation, identified by the producers and companies themselves. With a lighter regulatory burden, this regime is based on the principles of free competition and freedom of prices – that is, without government intervention in the definition of transport tariffs.
With that, the new system will allow that, after more than 100 years, Brazil will return to having private railways. The rules were discussed by the Senate since 2018, but were only voted on by the House in October. Voting procedures were accelerated after the Bolsonaro government issued an interim measure with similar content to the bill, which liberated the new regime. As the Planalto move angered the senators, an agreement calls for Congress to let the MP expire after its 120-day deadline, which happens in February. What will count is the text of the Legislative, which now goes to the sanction.
Since the government edited the MP, in August, companies have already expressed interest in building at least 36 new railways. These are projects that total R$ 150 billion in private investments, in 11,142 kilometers of tracks that cross 14 units of the Federation. Nine of these routes have already been authorized by the federal government, which signed the first private railway contracts, involving more than R$ 50 billion, last Thursday, 9.
The railway concession model – which made current operations viable – will continue to exist and is important, for example, for large projects that involve more than one load (of ore and grains, for example) and whose route cuts through more than one state. In these cases, there is an interest in railway policy on the part of the State, making the concession scheme – with stricter rules, but also with sharing of risks with the government (Union) – more interesting.
In the Chamber, the text was reported by Deputy Zé Vitor (PL-MG), who presented an opinion without changing the proposal approved by the Senate, where the rapporteur was Senator Jean Paul Prates (PT-RN).
Migration
The framework also foresees situations in which current concessionaires may migrate to the new operating model. Companies that manage concessions today will be able to ask the government to adapt the contract to the authorization regime, first, when a route released by this new model comes into operation and generates competition in the market.
There is a second possibility. In it, migration may occur when the concessionaire (or member of the same economic group) expands the extension or capacity of the railway it operates, to serve the same market, by at least 50%. In practice, the company will extend, via authorization, the network it already manages, starting to operate both stretches under the new model.
Another highlight of the project is related to abandoned or underutilized railways. The text authorizes the government to promote a public call to find out if there is any investor interested in obtaining authorization to explore railway stretches that are not implemented, idle or in the process of being returned or deactivated. The estimate of the National Association of Cargo Transport Users (Anut) is that there are 18 thousand km of abandoned or underutilized stretches.
See the main points of the new Legal Framework for Railways:
Operating models
How it is: In the public domain, railways are now operated by private partners under concession or permission regimes, and both involve a bidding process.
How it looks: The concession regime is maintained, but the authorization format also comes into play. With it, there is no bidding because the railroad is private, built from the private interest.
Regulation
How it is: In concessions, sector regulation is concentrated in bodies linked to the granting authority.
How it looks: The regulatory agency will continue with the same role, but there will also be the figure of the “railway self-regulator”. As for authorizations, there is no intervention in the definition of tariffs, for example.
abandoned sections
How it is:There is no specific policy or rule for recovering abandoned or underutilized sections.
How it looks: Government may make a call to find out if there is an investor
interested in exploring idle railway stretches.
Check the list of all applications presented so far:
Petrocity: São Mateus/ES – Ipatinga/MG: 410 km long
VLI: Lucas do Rio Verde/MT – Água Boa/MT: 557 km long
VLI: Uberlândia/MG – Chaveslândia/MG: 235 km long
VLI: Porto Franco – Ferries/MA: 230 km long
VLI: Cubatão/SP-Santos/SP: 8 km long
Ferroeste: Maracaju/MS – Dourados/MS: 76 km long
Ferroeste: Guarapuava/PR – Paranaguá/PR: 405.2 km long
Ferroeste: Cascavel/PR – Foz do Iguaçu/PR: 166 km long
Ferroeste: Cascavel/PR to Chapecó/SC: 286 km long
Grão Pará: Alcântara/MA – Açailândia/MA: 520 km long
Planalto Piauí Holdings: Suape/PE – Curral Novo/PI: 717 km long
Campo Grande Farm: Intermodal Terminal in Santo André/SP: 7 km long
Macro Desenvolvimento Ltda.: Presidente Kennedy/ES – Conceição do Mato Dentro/MG -Sete Lagoas/MG: 610 km long
Petrocity: Barra de São Francisco/ES – Brasília (DF): 1,108 km in length
Direction: Santos – Cubatão – Guarujá/SP – 37 km
Direction: Água Boa – Lucas do Rio Verde/MT: 508 km long
Direction: Uberlândia/MG – Chaveslândia/MG: 276.5 km long
Bracell: Lençóis Paulistas (SP): 4.29 km long
Bracell: Lençóis Paulistas-Pederneiras (SP): 19.5 km long
Morro do Pilar Minerais SA: Colatina – Linhares (ES): 100 km long
Brazil Iron Mineração Ltda: Abaíra – Brumado/BA – Fiol – FCA: 120 km long
Petrocity: Campos Verdes/GO – Unaí/MG: 530 km long
Minerva: Açailândia/MA – Barcarena/PA: 571.3 km long
Eldorado Brasil Celulose SA: Três Lagoas/MS – Aparecida do Taboado/MS: 88.9 km long
Zion Real Estate: Lucas do Rio Verde/MT to Sinop/MT: 153 km long
Macro Desenvolvimento Ltda: Sete Lagoas/MG to Anápolis/GO: 716 km in length
Cedro Participações: São Brás do Suaçuí/MG: 4.52 km in length
Ultracargo Logística SA: Port of Santos/SP: 2.3 km long
3G Empreendimentos e Logística SA: Barcarena/PA to Santana do Araguaia, with connection in Rondon do Pará/PA and Açailândia/MA: 1,370 km in length
Morro do Pilar SA: Morro do Pilar/MG to Nova Era/MG: 100 km long
MTC – Multimodal Caravelas: EF Bahia/Minas – Caravelas/BA to Araçuaí/MG, with a branch to Teixeira de Freitas/BA and Mucuri/BA: 491 km in length
MRS: Três Lagoas/MS to Panorama/SP: 100 km long
MRS: Unai to Pirapora/MG: 302 km long
MRS: Varginha to Andrelândia/MG: 143 km long
MRS: Ouro Preto to Conceição do Mato Dentro/MG: 213 km long
MRS: Rio Sobre to Belo Horizonte/MG: 42 km long
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