BRAZIL’s minister of transport, Renan Filho, announced on November 25 the government’s new freight concessions policy that introduces a new funding model combining public and private finance.
Setting out clear guidelines for the planning, governance and sustainability of new construction projects, the new policy will see the Ministry of Transport award eight concessions next year covering over 9000km of new and existing railway.
According to the ministry, this is expected to attract Reais 140bn ($US 26.3bn) of financing, unlocking a total of Reais 600bn of investment in the rail network. New sources of funding could include property development, while the National Bank for Economic and Social Development (BNDES) will participate in the development of new lending instruments for the rail sector.
The timetable for awarding the eight concessions in 2027 is as follows:
- April: Minas - Rio Corridor
- June: Southeastern Railway Ring
- July: Western Network
- August: East - West Corridor
- September: Grain Rail, and
- December: Southern Network, Paraná - Santa Catarina Corridor;
- Southern Network, Rio Grande Corridor;
- Southern Network, Mercosul Corridor.
In each case, the concession will be awarded by means of a public auction, with bidding documentation made available three months before the auction. Documentation for a ninth concession, covering the north extension of the North-South Railway, will be published in December 2026 ahead of the auction scheduled for March 2027.
The Ministry of Transport says that thousands of jobs will be created as the concessions unlock railway construction projects. It highlights the Grain Rail project to build a new line from Sinop in Mato Grosso state to Itaituba in Pará that has the potential to over 100,000 jobs during construction.
Under the new concessions policy, the government will be responsible for obtaining environmental approval for new construction, avoiding litigation, increasing legal certainty and guaranteeing that work can be completed more quickly, according to the ministry.
Concession renewals
Since it took office in 2023, the administration of president, Luiz Inácio Lula da Silva, has sought to accelerate its freight concessions pipeline, although progress has been slowed by the complexity of attracting private capital. To reduce risk and stimulate participation, the government has adopted a strategy of early concession renewals. Under this model, operators receive extended contracts in exchange for upfront payments which are then used to finance the initial, highest-risk years of new concession agreements.
As part of this approach, the government has signed the final contract for the early renewal of the Southeastern Network concession, held by MRS Logistics. The 1600km network serves the states of Minas Gerais, Rio de Janeiro and São Paulo, and its concession has been extended from the end of 2025 to 2056. The renewal has generated Reais 2.8bn in funding for the federal rail programme.
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