Potential investors question format’s safety and fear not to be paid in the future by that state company
Tatiana Bertolim
Two years after the government announced a mega-package of concessions to stimulate investments in infrastructure, construction projects for the railway industry remain on the shelf. Failures in projects and regulatory risks identified by investors have led to delays.
A solution for the impasse is expected in the industry once the Program of Investments in Logistics (PIL), of August 2012, disposes R$99.6 billion investments in construction and improvements on 11 thousand km of railways.
The big knot is in the concession model disposed by the government, where the right to carry cargoes will remain with the state company Valec. The company is to by 100% of the carrying capacity of the future operators and will reverse the right of use of tracks. However, investors are questioning the safety of that format and see risks in the payments to be made by that state company, which has carried for years, not unjustifiably, the image of bad management, delays at jobsites, debts and corruption.
The situation has become so uncomfortable that potential investors have started to refer to the “Valec risk” to justify their dissatisfaction with the model. To get around the situation, the government announced in June that it will present guaranties of payment five years in advance, anchored on titles of the National Treasure and deposited in specific accounts.
Loans will have a 30-year term and will involve the BNDES, Caixa Econômica Federal and Banco do Brasil. Also in June the National Agency of Land Transportation (ANTT) published a resolution regulating the character of an Independent Railway Operator (OFI), i.e., those who are going to operate railways without being the owners of that infrastructure.
The OFI regulation was the step necessary to make feasible tenders for the 12 stretches included in the program and two added later. The so-called calls to present complementary studies referring to six of them have already been published: Açailândia (MA) – Barcarena (PA), Anápolis (GO) – Corinto (MG), Estrela D’Oeste (SP) – Dourados (MS), Belo Horizonte (MG) – Guanambi (BA), Sinop (MT) – Miritituba (PA) and Sapezal (MT) – Porto Velho (RO).
Anyway, the most probable scenario is that the tenders are pushed to 2015 and on. The first project to have a tender should be the Railway of Center-West Integration (Fico), 883 km long and essential to drain grain production. However, no date has been scheduled yet.
Requests for changes
Recently the National Confederation of Industries (CNI) has sent the main candidates to the presidency of the republic a document requesting changes in the tender model in the railways industry. For those entrepreneurs, the separation between infrastructure manager and operator can create difficulties to accommodate several companies in the same line, and has not had the efficacy expected in country operating in that same way. Another aspect raised by CNI is that making the federal government the guarantor of the incomes during the 25 years of the concession is a risk once nothing will prevent future governments from suspending the payments.
The guaranties proposed by the government to mitigate the “Valec risk” may even work out, says Hostílio Ratton, associate professor of the Program of Transportation Engineering of the Coppe Institute, UFRJ. However, as he sees it, there are problems in the concept of the tenders. The design disposes that the winner will be the one who offers the lowest price for the use of the traffic capacity offered. To him, this criterion makes no sense once in a railway the traffic is predictable and leaves little margin to make additional gains, differently from the situation in roads.
“For me, the most logical proposal should be changing the tender model, exchanging the capacity’s lowest-price for the right to operation’s highest price. Should operators be free to negotiate fares with train operators, the government would not have to buy the whole capacity of the tracks, just those the operator would be able to sell”, states Hostílio. “In this case, the impediment to negotiate directly the price to be charged with each one of the train operators would make no sense anymore and the track operator would be able to have more interesting margins in sales of rush hours”.
The professor also sees the need of making the relationship rules clearer between the concessions under the former model, verticalized, and the new ones based on the separation between infrastructure and operation. That is so because certainly there will be cases where the trains of the new railways will quite often have to ride on the old network, whose owners do not have any strict obligation to let them do it. It is necessary to define who is going to be in charge of that negotiation.
In the middle of the lack of definition of a concession model, the government faces another problem involving large companies. The railway system is deemed strategic for agribusiness and mining mega-groups, which makes their participation in the construction of new railways a challenge to conciliate interests. The subject has not been much discussed in the market and, for now, it goes around at the backstage. The traditional operators in the country, which had initially been invited to join the railway tenders, mainly because they had performed a major role in the success of the recent road auctions, suddenly started to perform a smaller role. Trouble is the government has had to listen to several proposals of companies that control soybean, corn and cotton plantations and ore exploration on the land where the railway plan has been outlined.
Shortage of specialized labor
In addition to regulatory issues, failures in the projects and in feasibility studies, there are other difficulties for investments in the railway network. There is a shortage of technicians and qualified labor as a result of decades of almost abandonment in the industry. Now, “the hurry to have things done pushes towards compulsive construction”, in addition to the use of studies not deep enough, which leaves loopholes enabling contractual amendments, observes Hostilio.
“Today, it is very hard to find qualified professionals in the railway industry. To fill that gap operators end up by investing in personnel qualification”, says Gustavo Bambini, executive director of the National Association of Railway Carriers (ANTF).
To him, the difficulties to have investments made in the industry do not arise only from the model per se, but from the high complexity and returns on investment only in the long run. “Additionally, the railway mode underwent a long decline period between the 1950’s and the 1990’s”, says Gustavo, adding that those restrictions explain the request for more guaranties made by investors.
The solutions for the industry, however, are far away. In addition to the difficulties in the new concessions, old projects also face difficulties and delays. The m
ost serious case is that of North-South Railway, which was launched in 1987 to link Pará to Rio Grande do Sul and is still far from being delivered. The stretch between Tocantins and Goiás, the last one built, was completed not long ago.
At Transnordestina railway the situation is also critical. Started in 2006, the construction of 1.7 thousand km should have been completed in 2010. The new date for completion is that the railway – which will go from Piau to Ceará – will only be ready within two years for almost the double of the initial price, R$4.5 billion.
By September, the construction work for the Transnordestina railway was being done by Odebrecht, but TSLA (Transnordestina Logística S.A.), a subsidiary of Companhia Siderúrgica
Nacional (CSN), terminated the contract and alleged that there were flaws in the project. The construction stopped – and the government, on its turn, also does not demand that the work should be resumed.
Today, cargo railways in Brazil sum up 27.8 thousand km. Out of those, over 4 thousand km are not fully operational.
The delays in the new and old construction works put pressure on the road network and jeopardize the efficiency of some of the main activities in the Brazilian economy. Last year 490 million t cargoes were carried by that network, out of which 75.71% of iron ore and coal, and 14.86% of agricultural commodities. The volume of grains – nowadays mostly carried on roads, with all the losses arising from that mode – could be much higher should the railway projects be implemented.
Fonte: Revista O Empreiteiro
