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Brazil to Delay Bidding for Bullet Train Project

Following its failure to attract private proposals for a high-speed rail between the cities of São Paolo and Rio de Janeiro, the Brazilian government has decided to cancel the competitive bidding scheduled for July 29 and change the rules for the project. Bidding will now be split into two phases—one to determine the operator and technology for the train, and the other to establish the company or consortium that will construct it. The train may even be operated by state-controlled company ETAV, according to O Estado de S. Paulo newspaper.

Bernardo Figueiredo, the director general of the Agência Nacional de Transportes Terrestres (National Agency of Land Transportation), attributed the lack of success in finding a bidder to difficulties between national and foreign companies in forming a consortium, which was a condition of the bidding process. “There were six groups with the technical knowledge but they had problems joining with civil construction firms,” Figueiredo explained. “Now we will separate the operation from the construction,” which will increase competition for the bids.

This is the third time the auction for the trem de alta velocidade (TAV) has been delayed. Bidding was originally supposed to take place in December 2010 but was postponed to April 2011 to accommodate potential bidders’ request for more time to analyze the project. In April it was again postponed to July to allow bidders to form consortiums. Following the latest changes, the first round of bidding is now expected to take place in September or October of this year, with the second round to follow in early 2012. Figueredo and other government officials have said the change in bidding process will not affect the project’s cost, estimated at a total of 38 billion reais ($24 billion), or its timeline, with construction expected to begin in 2013, though transport specialists and construction firms appear skeptical. Only a part of the TAV is likely to be completed by 2016.

The 500 kilometer (300 mile) rail link is considered a key infrastructure project for the government of Dilma Rousseff, which faces the notable challenge of upgrading and expanding its transportation infrastructure, especially in the lead-up to the 2016 Summer Olympics in Rio. Companies from China, France, Germany, Japan, Spain, and South Korea have demonstrated interest in the project, which will receive 20 billion reais ($13 billion) in loans from Brazilian development bank BNDES, and an additional $3.4 billion in direct government investment.

Any opinions expressed in this piece do not necessarily reflect those of Americas Quarterly or its publishers.
Tags: Brazil, transportation policy

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