Logistics companies Rumo and VLI Logistica are among a group of nine firms that have submitted requests to the ministry of infrastructure to build or extend railroads throughout Brazil as a new legal framework for the rail sector is being finalized.
So far there have been 19 requests that could mean R82bn ($14.8bn) in investment and 5,420 kilometers (km) of new rail lines across 12 states, according to the ministry. Some routes and locations are being hotly disputed among the companies, most of whom are in the fuel, cellulose and agricultural sectors and without railroad experience.
The new tracks would add to the more than 30,000 km of railroad currently in service, almost all for freight, according to 2014 data from the National Transportation Confederation.
Rumo and VLI, both with experience managing railroads, are vying over two new stretches. One of them would be a railroad between Lucas do Rio Verde and Agua Boa, municipalities in Mato Grosso state, with 557km of track and R6.4bn in expected investment.
Another section in dispute between the two is located in Minas Gerais state, between the cities of Chaveslandia and Uberlandia, with 235km of track. The projected investment is R2.7bn.
Besides these stretches that face competition, VLI also made a request to build new rail lines between the cities of Cubatao and Santos, in Sao Paulo state, with an 8km stretch of track, and between the cities of Porto Franco and Balsas, in Maranhao state, with 245km of track.
Rumo, on the other hand, applied to build a 37km rail line worth R1bn of investment, connecting the cities of Cubatao, Santos and Guaruja, all located in Sao Paulo state.
VLI already operates the Centro-Atlantica Railroad (FCA), which is 7,220km extension and passes through 7 states, connecting the southeast, northeast and central-west regions.
Rumo operates the Malha Norte and the Malha Paulista, a rail corridor connecting the port of Santos, the largest in Brazil, to Rondonopolis, in Mato Grosso state, the largest farm producing state.
The 19 requests submitted so far are being analyzed by the National Secretary of Land Transport and the National Agency of Land Transport, according to the ministry of infrastructure.
The new requests are the result of the Legal Framework of Railroads, which is currently wending its way through Congress. The text has already been approved by the Senate and now must go to the lower house, where it is expected to pass.
This new law changes the former concession and operational models for the sector, allowing the government to grant exploration rights for new railroads or rail lines that have the same companies at origin and destination or that are located in the same region.
The law also creates the model of authorization to build the railroads. Different from a concession, this model has less participation by the federal government and allows companies to fully assume the construction and operation of the projects without payment to the state, in compliance with the regulatory norms of the sector.
