MRS initial concession was established in 1996, expiring in 2026. Railroad agreements with the Federal Government signed in the 1990s provided for the possibility of early renewal of concessions, in compliance with legislation and industry standards. Aiming to promote the development of the domestic railway sector, the Federal Government decided to execute the early renewal of the agreements, converting part of the grant into investments in infrastructure, with works executed by the concessionaires.
The year of 2022 was a milestone for MRS, with historic achievements and relevant impacts that will provide more efficiency and modernization for the public rail transport service. After more than six years of studies, planning and negotiation, in July 2022, MRS had its operation concession contract extended for additional 30 years after the end of the original agreement, i.e., until 2056. Prior to that, in April 2022, the board of the National Land Transport Agency (ANTT – acronym in Portuguese) approved the termination of the lease agreement, by signing the 3rd Amendment to the Concession Agreement. Accordingly, the movable assets received by the Concessionaire at the time of privatization may be disposed of, assigned and/or replaced without the need for administrative processes at the National Department of Transport Infrastructure (DNIT – acronym in Portuguese), provided that the conditions regarding the equivalent capacities that should be reverted to the Federal Government at the end of MRS concession, in 2056, are met. Regarding real estate, an assignment agreement was executed, with the breakdown of the assets that were assigned to the Company.
The process of renewing the concession started in 2015 based on the request for an early extension and throughout the journey, MRS submitted the business plan and held public hearings with the aim of capturing contributions from society. On June 1, 2022, there was unanimous approval by the Federal Court of Auditors (TCU – acronym in Portuguese) of the MRS process, reflecting the technical rigor and completeness of the documents submitted by the Company.
Subsequently, ANTT collective board approved, on July 27, 2022, the studies and documents for the early renewal of Malha Sudeste de Ferrovias agreement. The decision was published on July 28, 2022, in the Federal Official Gazette, the signature of the 4th Amendment to MRS Concession Agreement took place on July 29, 2022, in a face-to-face celebration at the company’s headquarters, in Juiz de Fora, MG.
With the expansion of the horizon for return of investments made in the railroad, MRS intends to double the General Cargo volume and multiply by seven o volume transported in containers over the new agreement period. The growth represents investments that will bring several benefits to society, such as an increase in the railroad transport share in Brazilian transportation matrix, increased competitiveness for the domestic production sector, job creation, and heating up the economy.
The investment plan provided for in the new agreement was prepared jointly with the Ministry of Infrastructure and the National Land Transport Agency (ANTT – acronym in Portuguese) and is supported by three pillars: capacity expansion to meet performance parameters, structuring investments of public interest and works to improve urban mobility.
In return for the early renewal of the concession, the plan provides for disbursements in the order of R$ 11 billion in construction and acquisition of assets, as well as financial expenditures on various supplementary obligations. Adding the mandatory investments to other current investments made by the company, a total of R$ 31 billion in investments is expected by 2056.
After the renegotiation, MRS has a new focus: fully comply with the more than 500 obligations set forth to ensure the quality of services provided by the Company, the maintenance of the asset in perfect operating condition, and the improvement of the service level to end users. To this end, the company has been prepared throughout 2022 by investing in human resources and in structuring areas and processes.
Although several works have already started, most are scheduled for 2023 and the following years, promising an intense period for MRS. Throughout the year, 30 work fronts are expected to be started, considering the most lengthy investments that have a delivery schedule for the following years. Eighteen initiatives are scheduled for completion in July 2023. In parallel, some projects will start the technical studies stage for the definition of the execution parameters over the next few years.
In addition to the robust investment plan, with the new agreement, MRS also undertakes to pay 138 quarterly installments in the amount of R$ 14 million over the next few years. This amount is added to the amount paid, on quarterly basis, as a right for the concession until 2026. It is worth mentioning that the Ministry of Infrastructure, by means of public policy, decided to reduce the right-of-way tariff in Baixada Santista.
ConcessION RENEWED UNTIL 2056
#MRS2056 – The MRS of future is formed by you
APRIL 29, 2022
Termination of the lease agreement
JUNE 1, 2022
Approval of the MRS business plan by the Federal Court of Auditors (TCU – acronym in Portuguese)
JULY 27, 2022
Approval of the early renewal process by the ANTT (National Land Trasnport Agency) board of directors
JULY 28, 2022
Publication of the approval in the DOU (The Federal Official Gazette)
JULY 29, 2022
Signature of the 4th amendment to MRS concession agreement
2026
Original concession term
2056
Concession renewal term
Highlights of concession renewal projects
Rail access to Port of Santos
With the concession renewal, MRS will implement an investment cycle in Baixada Santista that will more than double the volume transported by rail to the Port of Santos, with an estimate of reaching 109 million tons in 2056. Under its Investment Plan, MRS considered the estimated volume increase of the other concessionaires in the sector and, based on this data provided by ANTT, designed all the necessary solutions to ensure the best rail flow in access to the Santos pier. Santos Yard expansion has already started in 2022, a relevant work for MRS volume growth, but also for the volume growth of other railroads surrounding the concession MRS area, with direct positive impact on the domestic logistics. After the expansion, the yard started to allow the traffic and crossing of longer trains, of up to 2400 meters.
Expansion of MRS capacity
The amendment to the concession agreement provides for the construction and/or expansion of yards, construction of workshops, among other investments that support the expansion of MRS capacity. In 2022, for example, the construction of a new workshop for P1-7 was started, to support the maintenance of more than 20 track equipment, acquired for the project of major interventions on the permanent ways. This project aims at revamping the track superstructure, focusing on the removal of ballast at the end of its useful life and on the remodeling of the current wooden crossties for concrete, thereby providing more sustainability to the process. The project is slated for delivery in July 2024.
Segregation of lines in São Paulo
Currently, there are two tracks connecting Jundiaí and Rio Grande da Serra stations, passing through the central region of São Paulo (Estação da Luz). This system is used preferentially for the circulation of passenger trains in both ways to meet the demand of metropolitan transport users. Cargo trains use this system at pre-defined hours when passenger demand is low, impacting the circulation of cargo trains and restricting the Company’s operational options. MRS will build an exclusive cargo track, making a significant contribution to urban mobility in 12 municipalities and enhancing the Company’s operations. This is the largest project in the refurbishing plan, with an estimated investment of R$ 6.5 billion, half of the total planned for works. In 2022, MRS began the steps to obtain the necessary licenses to start interventions.
Urban mobility
Works related to improvements in the railroad’s relationship with the community, including construction of viaducts, footbridges, fences (safety walls) and active signaling on level crossings, among others, represent a major part of the number of deliveries expected for the next three years (2023 to 2026). More than 30 municipalities will benefit. Within this set of works, in 2022, the signaling of Barra Mansa (RJ) was executed, improving the safety of the railroad along with vehicle and pedestrian crossings.
Pillars of MRS Investment Plan
The commitments assumed by MRS with the renewal of the concession mainly include the initiatives listed below:
1
Segregation of lines for cargo and passenger trains in the metropolitan region of São Paulo, expanding the capacity of both systems, which today is constrained by the limited timetable due to shared tracks. The work will ensure right of way area for the construction of Intercidades (Intercity) Train, a project led by the Government of the State of São Paulo in partnership with the then Ministry of Infrastructure;
2
Construction of four intermodal hubs integrating the Southeast region. The hubs will be located in the cities of São Paulo (Mooca and Lapa), Igarapé (MG) and Queimados (RJ);
3
Over 100% capacity expansion of the rail accesses to the Port of Santos (right and left bank), ensuring capacity not only for MRS trains, but also for other railroads that access the Santos wharf;
4
Revitalization and modernization of railroad accesses to the Port of Rio, with works totaling more than R$ 50 million;
5
Investments in viaducts, footbridges, fences (safety walls), level crossings, flow controllers and extraordinary solutions to improve safety and reduce interference between the city and the railroad in communities to be executed in 51 municipalities in the coming years. The investment exceeds R$ 1 billion;
6
Acquisition of new locomotives and wagons to meet the increased demand: over 60 locomotives and 2 thousand wagons by the end of the concession agreement, with over 30 locomotives for the next 6 years. The expectation is that the volume of General Cargo transported by MRS will increase by more than 50% due to new investments, which will demand investments to increase the fleet of rolling stock;
7
Purchase of equipment for the railway maintenance. For the project of major interventions alone, for example, 26 pieces of equipment and 81 wagons were acquired to support the project’s execution;
8
Expansion of rail yards in the three states where MRS operates, allowing the circulation of larger and more productive trains, such as in Vale do Paraíba, where the crossing yards will be relocated outside urban centers and expanded to receive General Cargo trains up to 1500 meters.
