The government has proposed a rate of return of 11,04% to current railway operators to mark out investments that will be required in exchange for extending their concession contracts for 30 years. This index will still be discussed in a public hearing opened by the National Land Transport Agency (ANTT) and is subject to change, but it is the highest in the five years of the Dilma Rousseff administration in any area of infrastructure.
The deterioration of macroeconomic indicators has an influence on the increase in the rate of return on concessions, but a more attractive profitability for investors was well received in the market, as a way of making the plans to modernize the railway network viable.
The opening of negotiations for the extension of current contracts was announced in June, when Dilma launched the second stage of the Investment Program in Logistics (PIL), with the prospect of unlocking R$ 16 billion works. The government wants interventions such as expanding the fleet, duplicating roads, new patios and branches. One of the most important works being negotiated is the Ferroanel de São Paulo, on the MRS network, which would allow freight trains to bypass the capital of São Paulo without waiting for tight time “windows”, usually at dawn, competing for space on the used tracks. by the passenger lines of the Companhia Paulista de Trens Metropolitanos (CPTM).
The Ministry of Finance sees room for charging grants in the renewal of concessions. The decision, as well as the calculation of values, essentially depends on defining which works will be included in the “obligations” of the concessionaires to obtain another three decades of contract.
Possibly vaccinated by the failure of PIL 1, which provided for 10 kilometers of new railroads and was unable to bid for anything, the government has acted with caution and talked a lot with companies before closing contractual amendments. Now, almost six months after the announcement, the draft amendments are available. At 47 pages, they are almost triple the length of the current contracts, which expire in the middle of the next decade. This gives a dimension of the level of detail and the innovations that are included.
One aspect is the partial deindexation of rail freight. Nowadays, the readjustments authorized by the regulatory agency are exclusively based on the IGPDI. The proposal is to use the inflation index as a reference for only 60% of the readjustment. The remainder would reflect the variation in diesel oil in the previous 12-month period.
ANTT also wants the new contracts to make clear the operating rules of the right of way, an instrument that allows trains coming from other railroads to access the tracks managed by a given concessionaire. The government believes that this definition will be important for the auctions of the next railway stretches that will be granted.
The argument is that the company that wants to compete, for example, for the concession of the remaining lots of Ferrovia NorteSul, has to know in advance what conditions are required to take its cargo to the port of Santos, that is, on what days, times and volumes rails will be available. The right of way is one of the most controversial topics in the rail industry.
A methodology was also developed to define works required in return for the extension of concessions. The National Transport Confederation (CNT) has already made an alarming diagnosis of the network's problems. In 2011, it indicated the existence of 2.659 critical level crossings and 276 absolutely priority ones, where there is an intersection of rails with highways or urban avenues. This not only poses a threat to safety, increasing the risk of accidents, but also leads to a loss of train efficiency.
The choice of the type of solution will essentially depend on the degree of interference of the railroad in each urban agglomeration: high, medium or low. In municipalities with more than 100 inhabitants and traffic exceeding three pairs of trains per day, for example, the government signals the demand for a railroad bypass of the city. When the problem involves municipalities with less than 10 inhabitants and traffic of less than three pairs of trains, blocking access to the right-of-way (railway margins) would suffice.
At least eight quality indicators such as punctuality of trips and cargo integrity are part of the contract drafts to assess whether the services will be adequately provided. The possibility is even foreseen of canceling the concession in case of non-compliance with the stipulated targets for three consecutive years or five alternate years.
To provide more transparency and improve communication with users, the intention is to set up a kind of “virtual control center”, with online information about the exact location of loads and the coming and going of trains. The new system would have to be implemented within 24 months after the amendments were signed.
Concessionaires still have work to do before renewing their concessions. They must submit demand studies, network situation diagnosis, operational studies, investment projects and socio-environmental assessment to the regulatory agency. After all this, the documents of each company will be analyzed individually. At best, this process would be completed by the end of the first half of 2016.
Source: Valor Econômico
By: Daniel Rittner and Murillo Camarotto
