Crossings and Poor Families Are Slowing Down Brazilian Trains

The Brazilian railway sector grows and will carry on growing up to the end of the decade. But not all is sunshine. There are bottlenecks that increase the chances of accidents, reduce the speed and lessen the competitiveness of trains as a means of transport.

Removing these obstacles is responsibility of the government. "If there isn’t an effective participation of the government, the system will stagnate around the year 2010," said the executive director of the National Association of Railway Transport (ANTF), Rodrigo Vilaça.

According to the ANTF, there are 11,000 railway crossings throughout the network – those points where there are, for example, a crossing of a road with the railway line -, of which 1,100 are considered " extremely critical".

Concession holders want the government to develop a specific program for these problems, which include inadequate location of crossings, bad signaling and clandestine crossings.

There are also 824 points of invasion, which are communities that have installed themselves dangerously close to the rail lines, especially in the great urban centers and areas considered strategic, like accesses to ports. The cases go from the use of the line by pedestrians and as leisure area, to houses with doors looking onto the tracks.

"There are 200,000 families," said Vilaça. According to the association, the relocation of these people, as well as reducing the risk of accidents, will result in an increase in the trains’ average speed in the cities from 5 kilometers per hour to 40 kilometers per hour.

There are also the so-called "logistics bottlenecks", which happen, for example, where trains and cars try taking up the same space and in places where the network is old and the stretch is sinuous or with strong inclination.

According to Vilaça, an investment of US$ 364.6 million in the next three years would be enough to solve 80% of the "main problems" with railway crossings and invasions.

"The government hasn’t removed the physical bottlenecks. In the whole world the state participates in the projects and here the government doesn’t have a budget to solve the existing problems," he stated.

According to him, while the concession holders invested 11 billion reais (US$ 5.1 billion) in 10 years, the government invested 500 million reais (US$ 233 million), "principally in the North-South Railway."

The greatest obstacle in the railway network, however, and here both government and private sector agree, is the crossing between the city of São Paulo towards the Santos Port, in Southeast Brazil. The northern stretch of the São Paulo Ring Railway alone is estimated at 850 million reais (US$ 396 million) and due to be done in a public-private partnership (PPP) regime.

"The most important construction, undoubtedly, is the São Paulo Ring Railway, this would help everything," said Vilaça. "It is necessary to equate the Ring Railway. The greatest bottleneck in the country is crossing São Paulo," agreed the director at the Transport Planning and Policy Evaluation Department at the Ministry of Transportation, Francisco Luiz Baptista Costa. The construction has not even been open for tender.

The ANTF wants the government to invest the value the operators paid for their concessions in the removal of bottlenecks – 373 million reais (US$ 175 million) in 2005 – and also funds from the Contribution on Intervention in the Economic Domain (CIDE), better known as the Fuel Tax, or leave this work in charge of companies, permitting the value invested be deducted from the concession fees.

The Government Does What It Can

Costa contests part of the information, especially regarding what has already been invested by the state, and says that the government has been doing its part wherever possible.

"How about the 1.2 billion reais (US$ 562 million) invested in Brasil Ferrovias by the BNDES, what is that?" he inquired, referring to operations to save the company last year, which involved the payment of debts and investment of new funds. Nowadays the Brazilian Development Bank (BNDES) has 46.6% of company capital.

He added that investment made by the concession holders must be commemorated, but that they are natural to privatization. "The concession holders invested this value as it was stated in contract. That is why the government made the concessions, to transfer the investment to the private sector," he stated.

According to Costa, the government has been working together with the ANTF to identify the main bottlenecks and in the budget bill for 2006, funds have been allocated for the solution of problems considered emblematic, like 30 million reais (US$ 14 million) to make trains circle around the cities of São Félix and Cachoeira, in the northeastern Brazilian state of Bahia, where trains and cars share a bridge; 11 million reais (US$ 5.2 million) for trains to circle São Francisco do Sul, in Santa Catarina (South); 14 million reais (US$ 6.6 million) for a river crossing at Barra Mansa, in Rio de Janeiro (Southeast); and another 48 million reais (US$ 22.5 million) for other services.

Regarding the possibility of discounting the works from the concession holders’ fees, the government finds the proposal interesting, but says that there are no legal instruments making it possible, as the funds go to the treasury, and it is not compulsory for them to be invested by the sector.

Public Financing

He added that future projects will include government participation. The Transnordestina railway, for example, budgeted at R$ 4.5 billion (US$ 2.1 billion), will have 3.95 billion reais (US$ 1.8 billion) in direct investment or financing by state-owned organizations like the Fund for Investment in the Northeast (Finor), the Fund for Development of the Northeast (FNDE) and the Brazilian Development Bank (BNDES).

The financing is also a matter of discussion. "There are still many things to do in terms of public investment and financing at low interest rates. Over the last four years operators have imported from the United States over 500 used locomotives, all of this due to the cost of purchase and not considering long term economy," stated Eduardo Moreira, the product manager at GE Transportation, which makes locomotives in Contagem (in Minas Gerais, in Southeast Brazil).

The BNDES has a special line of credit for railway infrastructure projects in the North and Northeast. Apart from that, according to a spokesperson for the bank, other financing for the sector may be found within normal lines at the bank, which has a budget of 60 billion reais (US$ 28 billion) this year. On its loans, the BNDES charges the Long-Term Interest Rate (TJLP), currently at 8.15% a year.

For the concession holders, however, financing cannot be confused with direct investment, as it is necessary to pay it back with interest. "Public-Private Partnerships and the BNDES are great, but we want to amortize the values. And even the BNDES is making that proposition," agreed Vilaça.

Logistics Plan

Costa also stated that the budget of the Ministry of Transportation has been rising, from 2 billion reais (US$ 937 million) to 4.5 billion reais (US$ 2.1 billion) in 2005 and should reach 6.5 billion reais (US$ 3 billion) this year, including the funds in the CIDE.

He finished off explaining that the government should present up to December a National Logistics and Transportation Plan. "We are going to study what is the most economic transportation mode for each region and destination. This will be a medium and long term planning, bringing together the federal government, the private sector and state governments," he declared.

Anba –


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