en.Wedoany.com Reported - Brazil's National Land Transport Agency (ANTT) has launched a public hearing for the new concession of the Southern Railway Network (Malha Sul), a procedure designed to present the proposed project and gather stakeholder feedback.
This initiative stems from a Brazilian public policy choice: advancing a new round of tender studies rather than extending the existing concession operated by Rumo Malha Sul. The proposed model represents a significant shift from the current one, with the core change being the redivision of the railway network into three corridors: the Paraná-Santa Catarina Corridor (Corredor Paraná-Santa Catarina), the Rio Grande Corridor (Corredor Rio Grande), and the Mercosur Corridor (Corredor Mercosul).
According to ANTT's assessment, the Paraná-Santa Catarina Corridor currently accounts for approximately 78% of the entire Southern Railway Network's traffic, primarily transporting foreign trade cargo. The corridor has a net present value of R$ 4.4 billion (based on the April 2025 study reference date), indicating the project's economic viability. The Rio Grande Corridor, located entirely within the state of Rio Grande do Sul, accounts for 17% of network demand but faces a viability gap of R$ 800 million, meaning revenue cannot cover expected investments. The Mercosur Corridor is in an even more fragile economic position; this segment primarily transports fuel and has an estimated viability gap of R$ 2.1 billion, with capital expenditures reaching R$ 2.9 billion—close to the R$ 3.2 billion projected for the Paraná-Santa Catarina Corridor—and it was directly affected by the 2024 climate events in Rio Grande do Sul.
To bridge the viability gaps in the Rio Grande and Mercosur corridors, the project introduces a dedicated cross-investment mechanism. Under this arrangement, the primary funding source consists of contributions from the new concessionaire of the Paraná-Santa Catarina Corridor; if contributions fall short, cross-investments from other concessionaires are planned, with the final option being the use of public funds.
This proposal has sparked intense debate within the industry. At the first public meeting held in Brasília on July 16, participants were polarized over whether to split the Southern Railway Network. Supporters argue that the split will break the significant heterogeneity within the same railway network, a heterogeneity that has led to the neglect of lower-demand segments, while also helping to attract more regional investors. Critics, however, point out that the split not only perpetuates a focus on high-yield segments but may also exacerbate the neglect of uneconomical railway lines, and they worry that the cross-investment model could harm the investments needed for the Paraná-Santa Catarina Corridor due to fund transfers. Other views question the project's economic-financial model, arguing that changes in tariff, operating cost, and capital expenditure assumptions pose sustainability risks, and that EBITDA has been overestimated while maintenance investments have been underestimated.
At the public meeting, remarks from the Southern Development Integration Council (Codesul), composed of the governors of Paraná, Santa Catarina, Rio Grande do Sul, and Mato Grosso do Sul, drew significant attention. Santa Catarina filed a court request two days before the meeting to suspend the public hearing, but the request for a preliminary injunction was denied, and a similar request has also been submitted to the Federal Court of Accounts (TCU). In a TCU report, Minister Antonio Anastasia requested that the Ministry of Transport, ANTT, and Infra S.A. provide their views on relevant matters, including the supporting documents for the corridor definitions, measures to ensure state participation, and the treatment of approximately 2,994 kilometers of railway segments not included in the hearing's corridors, as well as compensation, fines, and other payments related to the current concession.
The deadline for submitting contributions to the Southern Railway Network public hearing is August 10, 2026. In addition to written proposals, in-person public meetings will be held in Curitiba, Porto Alegre, and Florianópolis. All contributions will be analyzed and responded to by ANTT and integrated into updated project documents. After final approval, the documents will be submitted to the TCU, which typically issues decisions to improve the draft tender or the proposed model. The contract term expires in February 2027; given the model's complexity, ANTT is already discussing a supplementary agreement to extend the contract by up to 24 months to avoid service interruptions.
