The Federal Government enacted the New Legal Framework for Railways, aimed at promoting railway transportation and railway infrastructure exploration in Brazil. Sector regulation will be streamlined to improve competitiveness and attract investments.
The Federal Government sanctioned the New Legal Framework for Railways (Law n.º 14.273/2021), establishing provisions that seek to promote railway transportation and railway infrastructure exploration in Brazil. The new law comes into force on February 6, 2022 (45 days after the official publication), when it will replace the Provisional Measure n.º 1.065/2021 (PM on railway exploration), adopted in August 2021.
Among the new dispositions for railways, the new legal framework enabled the private exploration of railways through authorization grants, in addition to the public exploration of railways through concessions (article 8). Concerning railway policy, article 4 established general principles for the construction, exploration, regulation, and supervision of railways in Brazil, which specifically include free competition, price freedom, and free initiative principles for operations under the authorization regime (private exploration).
The rules regarding the authorization regime, including the granting process, requirements, contract conditions, and termination are provided in chapter “V” of the new legal framework (articles 19 to 36). As provided in article 26, the private exploration of railway infrastructure through authorization grants comprises not only the development of new infrastructure, but also the exploration of unimplemented railways, idle railways under concession, and railways in the process of devolution or deactivation. Concessionaires currently in operation may request the adaptation of their contracts, switching from the concession to the authorization regime (article 64).
According to the Ministry of Infrastructure, since the adoption of the PM on railway exploration in August 2021, the private sector submitted 64 requests for the implementation of new railway infrastructure projects under the authorization regime (as of December 2021). Those requests account for 15 thousand kilometers of railroads and BRL 180 billion in long-term investments.
The new legal framework also provided the rules for the public exploration of railways through concessions in chapter “IV” (articles 10 to 18), including the distinction between “user investor” (article 16) and “associated investor” (article 17). Railway concessionaires may receive investments from non-associated “user” investors under a simplified framework in order to expand, improve or adapt their operational capacity, as long as the conditions from their concession contracts are met.
Furthermore, article 9 of the new law provided that railway transportation companies whose services are detached from the exploration of railway infrastructure (“agente transportador ferroviário”) will operate under a specific registration system, which will be further regulated.
Additionally, chapter “VI” (articles 37 to 42) provided common rules for public and private systems of railway exploration, including rules regarding the sharing of railway infrastructure; chapter “VII” (articles 43 to 47) enabled operating companies to establish bodies for self-regulation; chapter “VIII” (articles 48 to 59) provided rules regarding transit and transportation; and chapter “IX” (articles 60 to 62) provided rules for urban operations.
