Ferroeste cargo handling Jan-Oct grows 34% YoY

Cargo handling by Estrada de Ferro Paraná Oeste S / A (“Ferroeste”), which connects Cascavel to Guarapuava and transports agricultural production from western Paraná to the Port of Paranaguá, grew 34% in the first ten months of 2020, compared to the same period in 2019. The volume from January to October this year reached 1.2 million tons transported and, even without counting November and December, it is already the largest quantity registered by the company in one year.

Grain and refrigerated chicken are sent by rail for export via the Port of Paranaguá, and fertilizers and bagged cement are transported to Cascavel. Grain transport alone (730,000 tons) reached a record level, helping to boost soybean exports from Paraná, which reached US$ 4.4 billion in October, 31% of everything that left the State to other countries and 57% higher compared to 2019.

Between January and October this year, Ferroeste recorded an operating profit of R$ 1.2 million and gross sales of R$ 19 million, according to the company’s balance sheet. There was also a 35% reduction in operating costs compared to 2019, as a result of cost cutting.

Privatization

Ferroeste was qualified in the middle of this year under the Federal Government’s Investment Partnership Program (CPPI), which should accelerate its privatization process. The request was made by the State Government and means that the Union will help Paraná with the necessary regulatory technical support in several areas, from modeling and the environment to attracting investors.

The expectation is to put Ferroeste up for auction at B3 by the end of 2021, with its Technical, Economic and Environmental Feasibility Study (EVTEA), the Environmental Impact Study (EIA) and its respective Environmental Impact Report (RIMA) for the railroad linking Maracaju (MS) to Paranaguá already concluded. The concession model (total or partial) will be discussed in a Project Governance Committee, but the idea is that the productive sector takes over the company and is committed to the construction of these new tracks.

The new railway will cover 1,371 kilometers. The project includes the construction of a network between Maracaju and Cascavel (west of Paraná), the revitalization of the current railway section operated by Ferroeste, between Cascavel and Guarapuava; the construction of a new route between Guarapuava and Paranaguá, and a multimodal branch between Cascavel and Foz do Iguaçu. As it is being prepared, there is no defined value for the work.

Economic and environmental feasibility studies are in progress, and economic and financial modeling is in the final contracting stage. In addition, the company’s valuation is also being carried out to survey the company’s assets.

Investments

Improvements are also underway with resources from the state government being invested in Ferroeste. They include R$ 1 million in the construction of a photovoltaic park to reduce electricity costs by 50%, R$ 1 million to resolve the nine critical points of the Guarapuava-Cascavel section, reducing speed restrictions, and improving transport efficiency; and R$ 3 million with support from Itaipu Binacional for contracting the Technical, Economic and Environmental Feasibility Studies (EVTEA) of the Cascavel terminals (new master plan for modernizing the terminal and preparing the structure for the Maracaju-Paranaguá railway) and Foz do Iguaçu (location analysis to complement the works in progress in the municipality, removing the trucks from the city center).

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