Railroad legal framework: understand what it is and its importance
The railroad sector plays a fundamental role in the transport logistics of the most developed countries in the world. In Brazil, this fact is no different. However, the country is still far behind large nations, such as China and the United States, in the development of this mode of transport. It is in this sense that the legal framework for the railroads may change the sector's panorama in the coming years.
Currently, Brazil has around 30 thousand km of railroads, divided into different railroad lines and passing through all regions of the country, but with greater presence in the South and Southeast regions.
The lines are managed by different logistics companies in the private sector through concessions offered by the government. These concessions have regulated the railroad legislation in Brazil at the time, since the 1990s. Previously, the lines were administered by the Federal Government.
But, what is the Legal Framework for railroads and what will be the changes in the sector, both in administration, in legislation and in the operation of national railroads? That's what we'll see next.
Content Index
Processing of the bill
The Railroads Legal Framework bill had to go through a series of steps until it reached its current status, close to being approved.
Processing of the project began in 2018. At the time, senator José Serra created PLS 261/2018, which established the main guidelines of the project.
Since the presentation of the project, it was taken for analysis by three main commissions: the Economic Affairs Commission (CAE), the Infrastructure Commission (CI) and the Constitution and Justice Commission (CCJ).
After being approved by the CAE, with some modifications, the bill for the Legal Framework for railroads remained under analysis by the IC for a long time, suffering from constant delays due to the worsening of the coronavirus pandemic.
It was only in November 2020 that Senator Jean Paul Prates (PT/RN), rapporteur of the project at the CI, gave his opinion and since then he has been looking for ways to dialogue with the government in order to proceed with the program.
Despite suffering from resistance from several fronts, President Jair Bolsonaro signed, in August 2021, a provisional measure of the Legal Framework for Railroads, giving progress to the project.
Thus, the MP for the Legal Framework of Railroads now awaits a direct response from Congress and the Senate to be effectively approved, putting into practice the plan established by the bill that modifies the structure of the operation of railroads in Brazil.
What is the Legal Framework for railroads?
Now that you know how the Legal Framework for Railroads project is going, it is important to give a more specific opinion on what the plan is about and what changes in the transport with the measure.
Well, in general, the Legal Framework for railroads is an idea that modifies the structure of the railroad sector's operating model.
Since the 1990s, after the government's privatization program, railroads have been granted to private companies through concessions. These concessions are auctioned off at auctions carried out by the Federal Government.
All concessions have an expiration date. In other words, after the end of the contract, the road returns to the government's power, being auctioned once more in accordance with the ideas stipulated by the current government.
The main characteristic of the Legal Framework for railroads is precisely to change this model, implementing the idea of a simplified authorization system, without the need for tenders.
As a result, private companies could invest in the construction of new railroads or modify existing ones, requiring only authorization from the federal public sphere, and no longer acquiring the rights to the railroad for a specified period of time through an auction.
Main news from previous legislation
The main innovations of the Legal Framework for railroads compared to previous legislation is precisely this change in the model of “ownership” of the railroads. Private companies will be able to invest freely and without facing all the bureaucracy that currently exists.
Another important detail in relation to the Legal Framework for railroads legislation is that companies that already have a bidding process, that is, a railroad concession, will be able to continue ahead of the line without a new auction.
It is important to highlight that the term of the authorization contract has a maximum duration of 99 years, well above the current model. Also, it can be extended after the period ends.
Finally, stretches that are not being used, vehicles that are inoperative or disabled, can be worked on by private companies that invest in the sector.
Possibility of new investments
With the approval of the Legal Framework for Railroads, the Government, analysts and businessmen in the sector are hopeful that the measure can make new investments emerge to increasingly improve national rail transport.
One of the major problems for the sector not to receive so many investments from the private sector is precisely the existing bureaucracy for companies to be able to win auctions, acquiring the rights to manage the railroads.
In addition, the lack of continuity is also a current issue that hinders the sector's growth, since, as concessions have a fixed period for the contracts to expire, and the need to carry out a new auction, it does not exist in this model current, a very high chance of continuing the work in a lane.
Finally, it is worth highlighting what the National Secretary for Land Transport highlighted to the federal government's own website. In a statement in September 2021, secretary Marcelo Costa highlighted that the provisional measure did indeed move the market and expectations for new investments are high.
“Only for railroads, based on this authorization model, with no public resources involved, all the investments and risks elaborated and carried out by private companies, we are totaling R$ 53 billion. It is a significant volume of investments that have the ability to reduce travel times and logistical logistics in the country, making the products produced here much more competitive in the international market”, highlighted Marcelo.
Conclusion
As we have seen, the implementation of the new Provisional Measure of the Legal Framework for railroads can bring a series of changes to the railroad sector. Seeking new revenue for the sector, the Federal Government signed the MP and now awaits the response of the National Congress and the Senate so that the administration of Brazilian railroads ceases to function under the concession regime and starts to be controlled by an authorization system.
Searchs:
