BRAZIL: On October 16 changes to planned legislation intended to facilitate investment in the rail sector by private entrepreneurs were published in the Official Gazette. This followed a vote by National Congress on October 4 and signature by President Luiz Inácio da Silva on October 11.
The changes relate to the Railway Law passed in December 2021 which was intended to provide a faster and more flexible way for private companies or consortia to implement railway construction and investment projects. They deal with 19 sections of the law and reverse a number of vetoes that had been imposed by former President Jair Bolsonaro.
The relevant articles in the legislation relate to documentation on technical, economic and environmental feasibility studies, capacity issues, and the technical and operational conditions for sharing of railway infrastructure.
Another change confirms that a rail operator may only refuse to carry cargo if the refusal is justified on the grounds of insufficient track capacity, failure to meet the contracted conditions for transport, or lack of availability of rolling stock and ancillary services.
In certain circumstances a concessionaire will be entitled to ‘rebalancing’ of economic and financial arrangements when authorisation is granted for ‘provision of transport services within their area of influence’. This may take the form of a reduction in the value of a grant, an increase in the tariff ceiling, abolition of the obligation to invest or an extension of the contractual term.
Another change applicable during the first five years of validity of the law concerns proposals for railways within the area of influence of an existing concession. In these circumstances the concessionaire will have the ‘right of preference to obtain authorisation under the same conditions as those contained in the application of the original proposers or those filed in the winning proposal’. The relevant area of influence would be defined by the railway regulator who would grant the concessionaire 15 days to confirm its interest in exercising the right of preference.
The changes were welcomed by Vicente Abate, President of railway industry association Abifer, who said that they offered legal security for private investment in the sector. ‘They will contribute to improving the business environment in the railway sector’, he affirmed, but he also warned of the need to avoid excessive bureaucracy that could lead to long delays in projects being granted approval.