BR-163 highway x Ferrograo railroad
Between May and July 2020, two auction projects arrived at the Federal Court of Accounts (TCU): the concessions for the BR-163 highway and the EF-170 railway. In common the same aim: to improve the flow of grains through northern Brazil. After TCU verify the bidding documents, if there are no impediments, the auction will take place in early 2021. Although the projects serve the same purpose, they remain antagonistic in their implementation.
BR-163 was opened towards the Amazon in the 1970s, connecting Cuiabá in Mato Grosso State to Santarém in Pará State. In reality this was the section that connected the Midwest to the North, but the highway continues towards the South country (there is even a road route between Porto Alegre and Santarém, a 76 hours journey). Since its conception, the objective was to establish a way to transport agricultural products, which would be exported through the ports of Pará.
Completed in 1976, the highway had no paving. Only sections close to cities were paved over the years, others were fragments of dirt road, gravel and mud during the rainy season. In the 1990s, paving was carried out by both contractors and the Army. Even so, in the early 2000s about 80% of the highway in Pará was unpaved.
In the last 10 years there has been an advance in the works, culminating in the announcement of the total paving between the Mato Grosso-Pará border and the district of Miritituba, where there are terminals for loading soybeans. As is commonly the case with paving works, asphalt is not of the best quality, services are rushed, the load capacity is not adequate for the flow. It has been seen in the stretches already paved the appearance of holes and sinking of the track (June, July, August and September 2020).
The years of paving and maintenance have proved that it is expensive to maintain a 970 km extension in good condition, without any budget specifically dedicated to this. Thus, the Federal Government came up with the idea of granting private companies the administration of the highway, precisely on the most important segment for grain producers.
According to the Ministry of Infrastructure: “The concession term will be 10 years and the criterion for the auction will be the lowest rate, that is, whoever offers the highest discount on the referential rate (R$ 8.97 per 100 Km) wins. About R$ 1.89 billion in private investment and another R$ 1.02 billion in operating costs and expenses are expected. An additional 35 km of lane, 30 km of marginal roads, 173 km of extension and 187 accesses must be implemented, including a new entrance to the ports of Miritituba ”. One and a half year after the start of the contract, all paving must be completed. Considering the time that will pass between the auction and the beginning of the works, it is assumed that the road will not be in good traffic conditions. In five years, the concessionaire will have to build additional lanes, shoulders, bridges and marginal roads. Investments are significant for a work that is expected to return to the Government in 10 years, or stay on private equity in a extended contract.
With the highway paved the grain transport capacity is expected to double in five years. This will imply an increase in trucks traveling northwards, instead of going to ports in the south of the country. Undoubtedly, the improvement of the highway is an incentive for the transport of goods by road. But at the same time, the Government is adhering to the railway modal.
The idea of a railroad connecting the center to the north of Brazil already existed in the 19th century. The conference O Valle do Tapajós (1925), by Raymundo Brazil, mentions that in 1895 the Study Committee for the General Road Plan considered the Cuiabá-Santarém link to be a strategic commercial axis, as valuable as the Central Railway.
Since 2013, the project for a railroad to transport grain from Mato Grosso to Pará has been discussed. The idea came from the soybean producers who proposed it to the Government. There was a forecast of eliminating the use of trucks to transport grain, via BR-163, in the year 2030.
Ferrogrão, or Railroad 170 (EF-170), was classified as a public enterprise with private investment in 2016. Feasibility studies were produced by a group of grain transport companies. The modeling was conducted by the Empresa de Planejamento e Logística (a state company).
The railroad will depart from the city of SINOP (Mato Grosso) to the district of Miritituba, municipality of Itaituba (Pará), reaching 933 Km. Investments of at least R$ 8 billion are expected, which should be offset by a reduction of R$ 19,2 billion in freight costs compared to the highway. The concession term is 65 years.
The implementation of the railroad would be an opportunity for grain traders to take over transport logistics and no longer depend on individual cargo transporters. In addition, it redirects the flow of production from the southern ports to the northern ports of the country. Currently, 50% of the logistics are via the northern arc.
When installed, the EF-170 will bring high transport capacity and competitiveness to the northern logistics corridor. The project will ease traffic conditions on BR-163 highway, reducing the flow of heavy trucks and reducing maintenance costs.
Thus, an apparent antithesis is posed: a railway is designed literally parallel to a road axis that will be expanded. This contradiction was pointed out in the September 2020 Report of the Climate Policy Initiative, from PUC-Rio:
“In fact, Ferrogrão would be associated with logistics that ignores the most recent movements both in the railway sphere - with the implantation of the Central-West Integration Railway (FICO), modernization and expansion of the central section of the North-South, and extension of Ferronorte to Lucas do Rio Verde - as the modernization and eventual addition of the third lane of the BR-163 / MT / PA. Failure to consider the costs and benefits of its paving (currently completed) and the expansion of its capacity vis-à-vis the construction of Ferrogrão were not properly addressed. The concession for the highway - within an atypical 10-year period - indicates a vulnerability equally not contemplated in the Ferrogrão project to the competition of that highway ”.
Unlike the last 50 years, southwestern Pará may have an overload of road logistics. Both modals - road and rail - would improve grain transport. But there is uncertainty as to whether the two projects, carried out at the same time, will be complementary or adverse.
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