Brazil’s federal court of auditors – the country’s highest body regulating public spending – has given the go-ahead for the tender launch of a high-speed rail line connecting Rio de Janeiro and São Paulo.
The goal is to create a 511-kilometre rail line with trains travelling at a top speed of nearly 400 kilometres per hour between the international airports of Rio de Janeiro, São Paulo and Campinas and at least two intermediate stops. São Paulo and Rio are the Latin American country’s first- and second-most populous cities, respectively, while Campinas is a city about 100 kilometres northwest of São Paulo.
TCU, as the audit court is known, set the project’s final cost at just over R$33 billion (€14.8 billion; $18.5 billion) – a R$1.5 billion cut from its original price of R$34.6 billion. It also set the maximum tariffs for normal and peak time fares at R$149.85 and R$199.73 respectively, to be reviewed every five years. According to TCU, the line will generate R$192.7 billion in income over its 40-year concession period.
ANTT, the country’s federal transport body, said in a statement yesterday that it expects to tender the “bullet train” project by the end of next week. It also said that a public company called ETAV will be created to hold a 33 percent stake in the special purpose vehicle to be incorporated by the winner of the tender. ETAV can contribute a maximum of 10 percent of the project’s value.
The private partner will be eligible for up to R$19.9 billion, or roughly 60 percent, of the project’s cost in public funding over the course of 30 years, ATTN said. Repayments will only kick in once the five-year construction period – from 2011 to 2016 – finishes, the agency added.
Henrique Pinto – head of project structuring at Brazilian development bank BNDES, which is expected to provide the majority of the debt for the project – said the financing package for the winning consortium should come attached with clauses demanding a review of the financing terms at years five and ten. This is to protect investors from lower than expected demand in the first ten years of the project and secure a balance between revenues and cost of financing, he said.
New York-based Shearman & Sterling and São Paulo-based Manesco Ramires Perez Azevedo Marques Advocacia are the legal advisors on the contract.