Brazil bullet train may face further delays

Brazil’s Public Ministry has sued ANTT, the country’s transportation regulatory body, in the hopes of delaying the tender for the Rio de Janeiro to São Paulo high-speed train and various groups have requested that the $18bn mega-project be postponed.

The tender for Brazil’s high-speed rail project, which was delayed last year, is facing further obstacles as the deadline for bids approaches. Brazil’s Ministerio Público Federal, an independent body of public prosecutors, has sued the agency managing the bidding process for the massive Rio de Janeiro to São Paulo high-speed rail project, and other groups have also requested that the process be delayed.

The Trem de Alta Velocidade (TAV) project, which was estimated to cost $18 billion when the tender was announced last summer, involves the construction of 500 kilometres of rail lines between the international airports of Campinas, Rio de Janeiro and São Paulo. Trains could travel at up to 400 kilometres per hour. Brazilian National development bank BNDES was expected to provide the majority of the debt financing for the project.

Paulo Rocha, Jr., one of the federal prosecutors involved in the case, said the Minstério Público Federal (MPF) has filed two lawsuits against the Agência Nacional de Transportes Terrestres (ANTT) to protest the current arbitration system, and to argue that concessions for interstate bus lines should be resolved before the tender for the high-speed rail project gets underway.

Rocha said the MPF also had concerns about “sufficiency of competitive measures taken by the ANTT” as well as a “lack of detailed information on the projected demand” for the high-speed train.

He also insisted the bidding process should not continue without a congressional referendum to form a public company to partner with the high-speed rail line’s private developer and to examine legal issues around the R$20 billion (€8.7 billion; $12.3 billion) public loan for the project.

“Without a congressional bill we believe that any bid acceptance for the construction and operation of the TAV is inappropriate,” Rocha wrote in an email.

Rocha added that no injunctions against the project had been issued as of yesterday.

Hélio Mauro França, an executive superintendent at ANTT, said the MPF’s role is to challenge governmental decisions and activities, and the recommendations were simply part of MPF’s duties. MPF is separate from the judicial, executive, and legislative branches, and has a mandate to “supervise the execution of the laws that defend the national patrimony” and “issue recommendations suggesting improvements in the public services,” according to the federal government’s website.

“We tend to see this as normal or regular,” Franca said.

The TAV faces additional challenges beyond the MPF. Various industry associations, construction companies and technology providers have also requested that the current bidding process be postponed. However, França insisted that the tender process is still on schedule, with bids due at the end of the month.

“We have received requests but there is no decision yet,” França said.

If the ANTT decides to delay the bidding, it won’t be the first delay for the mega-project. Last year, the tender was delayed on concerns about competitiveness and requests from bidders, according to Vitor Rhein Schirato, attorney at São Paulo-based law firm Manesco, Ramires, Perez, Azevedo Marques, which is advising ANTT as well as BNDES on the project.

“The reason for the first delay was … the effort of the government to foster competition,” Schirato said, adding that the government did not want to proceed with only one confirmed bidder.

França said he expected between two and four Asian and European consortia to bid on the project.

“We feel that around two to three might be possible,” he said. “Four would be an exception.”