Federal Supreme Court assesses validity of the North-South Railway auction

Luiz Roberto Barroso, minister of the Supreme Federal Court of Brazil, has acknowledged receiving a petition (nº 16.382 / 2019) from Brazil’s organization of railway experts, FerroFrente, appealing the previously rejected injunction request for the North-South Railway (FNS) auction. The auction took place at São Paulo Stock Exchange (B3) on March 28. Cosan Group subsidiary, Rumo Logistics was the winner of Brazil’s first rail auction in 12 years, with a bid of R$2.719bn, while the only other bidder, VLI Multimodal, fell short with a bid of R$2.065bn.

The appellants reiterated their previous arguments that the concession contract does not guarantee the right of access, throughout the 30-year tenure of the project, to the stretches located north and south of the section, run by VLI Logistics and Rumo respectively. Ferrofrente, as well as the Federal Prosecution Service (MPF), have pointed out instances of flaws and favoritism within the concession contract, which has prevented other parties from participating in the auction.

The North-South Railway auction is one of Brazil’s most heavily debated concession contracts. The project covers 1,537km of railroad between Estrela D’Oeste, in São Paulo and Porto Nacional, in the Amazon state of Tocantins. The railway is estimated to have the potential to move 1.7m tons by 2020, and 22.73m tons by 2055.

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