Rumo wins the North-South Railway auction

Brazil’s National Agency of Land Transport (ANTT) auctioned the heavily debated North-South Railway (FNS) project at 3pm in the São Paulo Stock Exchange (B3) today. Rumo Logistics was the winner of Brazil’s first rail auction for 12 years, with a bid of R$2.719bn, while the only other bidder, VLI Multimodal, offered R$2.065bn. The concession is part of the Federal Government’s Investment Partnership Program (PPI).

Com investimentos calculados em R$ 2,72 bilhões, leilão da Ferrovia Norte-Sul (FNS) começa agora! #Infraestrutura #FerroviaNorteSul #PPI, @MInfraestrutura pic.twitter.com/qNGuQtMSLw

— Programa de Parcerias de Investimentos (@ppinvestimentos) March 28, 2019

The project covers 1,537km of railroad between Estrela D’Oeste, in São Paulo and Porto Nacional, in the Amazon state of Tocantins. The contract granted a 30-year tenure with no extension possibility. The railway is estimated to have the potential to move 1.7m tons by 2020, and 22.73m tons by 2055.

Earlier this week, DatamarNews reported that the Federal Public Prosecution Service (MPF) recommended the suspension of the auction, as the concession contract does not guarantee access throughout the tenure of the project to the stretches north and south of the section being auctioned, run by VLI Logistics and Rumo respectively. Ferrofrente and the Federal Prosecution Service (MPF) have pointed out instances of flaws and favoritism within the concession contract, including favoritism of the current operators of other parts of the railway. 

According to the concession contract, Rumo must make a 5% cash downpayment of the winning bid to secure the deal and the rest be paid in 120 quarterly installments.

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