Fortifying Brazil’s railways
Rail investment programme for private enterprise – 76 projects in 2022.
The ‘Pro Trilhos’ initiative in Brazil (pro rail), launched in September 2021, has been designed to launch a new era in the country’s railway network. 76 projects run by private investors have been submitted so far; a lot of them have already been started.
More than 60% of freight in Brazil still takes to the roads. But the agricultural industry, an essential sector for the country’s exports, often relies on the railways. Brazil, one of the world’s largest soya exporters, benefits from high demand from China, amongst other factors.
No less than five different gauges
The sector thus makes the functioning of the country’s railway infrastructure all the more important – which poses challenges for the nation and its rail operators. There’s no history of standardised gauges in Brazil. Even today, there are gauges measuring 600, 760, 1,000, 1,435 and 1,600 mm. The result is that the railways function very inefficiently.
The world’s twelfth-largest economy is now modernising its railway network with its ‘Pro Trilhos’ (Pro Rail) programme, aiming to double its network. Pro Trilhos is designed to give private investors the opportunity to present projects for new railway lines, junctions, stations and terminals to the central government. Once approved, they should be able to build the facilities themselves and operate them as concessionaires. Both greenfield and brownfield private projects are now possible in the sector, which has traditionally been dominated by the state.
Seeking private financiers
The ministry has received 49 applications to construct railways from the private sector since September last year, when the Pro Trilhos programme was launched. The projects cover more than 12,900 rail km in 14 federal states and represent an estimated investment of BRL 166 billion (USD 32.5 billion).
Brazil’s federal Pro Trilhos programme started in 2022, with 21 contracts signed for the construction and operation of railways, according to the Brazilian infrastructure ministry. With these signatures the firms have committed themselves to investing around BRL 50 billion (USD 10 billion) in a first stage, and to expanding the Brazilian rail network by an initial 3,500 km or so.
Most of the projects are located in the federal states of São Paulo, Mato Grosso do Sul, Paraná, Maranhão, Minas Gerais, Espírito Santo, Piauí as well as in Pernambuco. Contracts for the execution of the work concerned have so far been signed by the enterprises Bracell, Ferroeste, Grão Pará, Macro Desenvolvimento, Petrocity and by Planalto Piauí Participações.
The authorities expect the scheme to lead to lower transport costs and reduced CO2 emissions, and to create around 2 million new direct as well as indirect jobs.