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Brazil high speed rail project to be split in two after no bids received

Brazil’s National Land Transport Agency (ANTT) has decided to invite two separate bids for its £13bn Rio de Janeiro to Sao Paulo high speed rail line after no bids were received for the complete project by Monday’s bid deadline.

The high speed line is technically challenging with the 510km long route from Rio de Janeiro to Sao Paulo and Campinas including 90km of tunnels and 108km of bridges. The contract structure was also tough, with the concessionaire only getting 35 years to recoup costs from an anticipated six or seven years of construction. The concessionaire was expected to take on all risks, including construction costs, operations, demand and revenue. Regulation to safeguard the public interest demanded that the winning bidder would be the one that offers to charge the lowest fares.

ANTT has now said it will de-risk the project by stripping out construction from the concession, with the winning concessionaire responsible for buying the trains and then operating and maintaining the line. The concessionaire, once appointed, will then be responsible selecting contractors to build the line, with work divided into smaller packages. The Brazilian government will impose criteria for this engagement.

The changes were announced by the director general of the Agency, Bernardo Figueiredo on Monday.

“We had long discussions with investors. However, we cannot obtain national alliances with contractors, which harmed the bid,” he said.

Six teams were identified early on in the process - including consortiums from Spain, France, Germany, China, South Korea and Japan – that were expected in due course to team up with Brazilian contractors. But no bids were submitted, despite the bid deadline being repeatedly put back from the original 29 November 2010 date.

Bidders are now expected to include France’s Alstom and a Japanese consortium. There may be other bidders from Italy, Germany, Spain, China and South Korea, according to ANTT. Earlier on Monday, Brazil’s biggest public works companies, which would handle much of the construction and logistics with any international partners, had told the government they would not be bidding.

Figueiredo said the changes in the announcement will not lead to a delay in the project’s opening. The expectation is that the first contract will be let this year, with construction contracts let next year. “With the new model, we have two advantages. More companies may be eligible in each batch and [construction times] can also be reduced because groups can work simultaneously,” he said.

ANTT must still hold a public hearing in August on the amendments.

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