Brazil’s Olympic Rail Challenge

28 October 2009 (Last Updated October 28th, 2009 18:30)

After clinching bids for 2014's FIFA World Cup and the 2016 Olympic Games, Brazil requires massive rail investment. Alex Hawkes speaks exclusively to the UK Trade and Investment organisation about how the country should prepare itself.

Brazil’s Olympic Rail Challenge

The International Olympic Committee's decision on 2 October to select the Brazilian capital of Rio de Janeiro as the host city for the 2016 Olympic and Paralympic games is likely to have significant repercussions for the future infrastructure and economic development of the nation.

From new investment in roads, airports and railways to the rapid development of the country's hotel and tourism industry, Brazil will witness the launch of a number of large-scale projects over the course of the next seven years.

The fact that the country will also play host nation for the 2014 FIFA World Cup only provides further incentive to complete necessary infrastructure upgrades on time and problem free. According to UK Trade & Investment, Brazil's infrastructure could require an investment of £10–30bn to successfully prepare for the event.

Realising this, the Brazilian government has already launched its flagship investment programme aimed at stimulating economic growth and developing infrastructure. Announced in 2007, the Accelerated Growth Programme has allocated about £208bn for the next four years and a further £125bn for investments post-2010.

By the end of 2009, the government hopes to have outlined state-funded infrastructure projects that can support the World Cup in 2014.

"Brazil has almost 30,000km of railway tracks that are largely concentrated in the country's south, south-east and north-east regions."

As the fifth-largest country in the world and the most influential economy in South America, Brazil is under particular pressure to successfully deliver for the Olympics Games, which it faced stiff competition from the US to host. The event will mark the first time a South American country has hosted the event and with Brazil now being widely considered alongside Russia, India and China – together they form the powerful BRIC emerging economies – the spotlight on the event will be evermore intense.

Improving transport links remains a particular priority for the Brazilian Government and the country's rail infrastructure is likely to receive serious attention. Brazil has almost 30,000km of railway tracks that are largely concentrated in the country's south, south-east and north-east regions.

This compares slimly to rail densities in other countries, particularly in Europe. To compensate the Brazilian Government has pledged £2.5bn to the rail sector in the lead-up to the World Cup. This sum does not include urban rail transport systems.

The funds will be used to construct about 2,518km worth of new railways, which will form the basis of an integrated network of wide-gauge freight rail across the country. The government also plans to introduce Brazil's first long-distance passenger railway, which will link Sao Paulo and Rio de Janeiro in just 94 minutes.

As Brazil puts its rail plans into action, we caught up with the UK's Trade & Investment's Brazil Specialist Faith Quigley to get her expert view on the various rail projects the nation has planned for the two major tournaments.

Alex Hawkes: Rail infrastructure in South America is relatively young compared to other parts of the world. What developments have there been in Brazil?

Faith Quigley: At the moment, Brazil's rail infrastructure very much revolves around a freight network. Similar to the country's investment in road infrastructure, Brazil's Government is hoping to create a network of freight lines across the country, especially from mineral production centres such as Minas Gerais to ports.

There is huge investment going into this area, not only from the government but also the private sector. Mining companies such as Vale are investing huge amounts to improve infrastructure as they feel the government either does not have the resources to or is not completing projects fast enough for their requirements.

"The first high-speed passenger rail link is unlikely to be finished by 2014."

AH: And on the passenger front?

FQ: Huge investment in long-distance rail networks is unlikely apart from the Rio-Sao Paulo link. There will, however, be a continued programme of investment across the country into urban transport systems.

All of the 12 cities that are hosting the World Cup are looking at investing in metro lines, tram lines and light rail networks.

AH: I understand a key part of the Brazilian Government's plans to expand rail infrastructure in time for the World Cup and Olympic Games is a high-speed passenger link between Sao Paulo and Rio de Janeiro. How is that project progressing?

FQ: The first high-speed passenger rail link is unlikely to be finished by 2014. The government was hoping to have completed the project by then, but most experts say that is impossible. Due to the scale of the project, it simply ran out of time.

The most recent reports say that [the Brazilian] government wants it ready by 2015, but again I am not sure if that corresponds with what experts will think.

AH: So visitors to the World Cup will be predominantly flying between the host cities?

FQ: Most likely. Airports are another area the country is investing heavily in and for those without the money to fly there is an extensive highway system in place. Road transportation remains the main method of travelling intercity in Brazil due to the lack of railways.

"There has been a real display of interest in developing Brazil's rail networks, particularly within its cities."

AH: Presumably there will be a host of opportunities for international rail companies within these projects?

FQ: The construction market in Brazil is well developed and has a lot of experience of working with international suppliers for trains and rail equipment. The likes of Thales, Siemens and Bombardier are all present in the region

There will certainly be a lot of potential for specialist firms focusing on supply chain products, rail technology solutions and consultancy.

AH: Finally, what long-term repercussions will such investment have on the future of Brazil's rail sector?

FQ: There has been a real display of interest in developing Brazil's rail networks, particularly within its cities. Its not just Sao Paulo that suffers from heavy traffic congestion, most of the cities do and state-level governments are already thinking about how they can handle that problem and meet long-term transport demands. Whatever investment the country makes now to prepare for the World Cup and then the Olympic Games is going to benefit local communities in the long term.