Asians enter strongly into the fight for the bullet train

As the day for the launch of the Invitation to Bid for the tender for the bullet train connecting Rio de Janeiro and São Paulo, the interested parties in this which is the most important single project in the Growth Acceleration Plan (PAC), budgeted at some R$ 34 billion, (€ 13.9 billion), are getting ready for the contest, highlights the Folha de S. Paulo newspaper, in an article signed by Humberto Medina in last Friday’s issue (19 February).

The news is made public just one month after the Chief of Staff, Dilma Rousseff, declared that she was in favour of Asian presence in the work on the high-speed train (TAV). At that time, she said that “the Asians have plenty of experience in getting such jobs done in the shortest time". Dilma assured everyone that the high-speed train would be operational during the Rio de Janeiro Summer Olympics in 2016, but that this could be assured for the 2014 World Cup.

Who are in the running
In recent the past weeks, negotiations have been taking place intensely between businesspeople and the Government, and there are two possible combinations of consortiums: the construction firm Andrade Gutierrez with Japanese groups (Mitsui, Toshiba, Hitachi, Mitsubishi e Japan Railway) and the Bertin Group with South Koreans (Samsung and Hyundai). The position taken up by the Chinese intrigues the Brazilian authorities - first of all they seemed to be favourable to an association with Odebrecht, but now the orientalsOrientals are suggesting the possibility of going it alone, and then seeking association with some national group only when the work has been assured.

In these talks, the companies have already been insisting with the Government, so that some changes are made to the Invitation to Bid, in aspects that they consider inadequate. The Government ended up surrendering in many points. Now, the expectations are with regard to the approval of the studies by the Federal Audit Court (Tribunal de Contas da União) and any other changes as the institution may suggest.

Rules
The construction of the bullet train shall require heavy Government funding. To reduce this impact as much as possible, one of the rules of the tender sets out that the winner shall be the company or consortium which asks the State for less money. This criterion shall have a participation of 70% in the final classification.

The fare shall also be taken into account, with a weight of 30%. The company that proposes the lowest fare shall be at an advantage, respecting the fare cap set by the Government, which is R$ 0.50 per kilometrere, or R$ 206.15 (€ 84.36) between the two city centrescenters (from the Barão de Mauá Station, in Rio, to the Campo de Marte, in São Paulo).

The Brazilian Government shall take part in the winning consortium by means of a state company which shall invest up to R$ 3.4 billion. There shall be direct financing by the State of up to R$ 20.8 billion, with a maturity period of 30 years.

The main purpose of this state company is that of absorbing the technology of high-speed passenger train transport, to be used in forthcoming projects such as a connection between Viracopos and Belo Horizonte and between São Paulo and Curitiba.