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Title: Concession for High Speed Train between Rio de Janeiro and Sao Paulo

Languages: Portuguese

Type: Document

Region: Latin America and Caribbean

Country: Brazil

Sectors: Transportation

Keywords: Contractual Provisions, Rail, Transport, Transport Core

DocumentLink(s):

Document(s):

Draft Concession Agreement for High Speed Train from Rio de Janeiro to Sao Paolo (Portugese)1.27 MB

Document Summary:

Bidding documents for a High Speed Train between Rio de Janeiro and Sao Paulo (1 July 2013) including the following key ones (all in Portuguese):

  • Draft Request for Proposal (RFP)  
  • Draft Concession Agreement (with attachments and schedules):  
  • Draft Shareholders Agreement  

This is the second time that the National Transportation Agency has sought to bid out this project – it has been re-designed. It is still to early to know whether it will reach financial close. 

Agreement summary: The draft Concession Agreement is to be entered by and between the Federal Union, the Concessionaire and an Intervening-Acquiescing Party.

It is governed by Federal Laws 9.491, of 9 September 1997; 8.987, of 13 February 1995; and 10.233, of 5 June 2001

Document Details:

It contains the following terms and conditions:

  • The Concessionaire will be responsible for providing the rail service and for supplying and establishing the infrastructure (Object of the Contract).
  • The Object includes the following activities which do not need to go through bidding procedure: supplying and set-up of infrastructure; execution of the works; operation, maintenance and conservation of the High Speed Train (TAV in its Portuguese acronym); Technology transfer; providing of the rail service; reinvestments in the infra- and super-structure, among others.
  • The value of the contract is of BRL 241,738,030,000 (which in today’s [26 July 2013] exchange rate amounts to USD 107,310,412,374); but such value has only an “indicative purpose” and cannot be used by either party to claim the reestablishment of the so-called “economical and financial equilibrium” of the contract.
  • The Concessionaire will be paid in Fees (main source of income) and will be allowed to have extraordinary sources of income as provided in the contract.
  • The term for declaration of commercial operation is up to 60 months from the signature of the contract.
  • The term for operation, maintenance and conservation of the High Speed Train is of 40 years.
  • The concession is comprised of a list of goods whose possession, maintenance, surveillance and guard are the responsibility of the Concessionaire: All goods related to the “super-structure”; all goods related to the operation and maintenance of the TAV, among others.
  • The Concessionaire shall pay the State the “Payment for the Concession” which is the result of the multiplication of (i) Reference Value of the Payment for the Concession (which was offered by the Concessionaire) by (ii) the amount of “Train.Km Equivalent” of the due quarter (calculated according to a formula set out in clause 22.2.1).
  • The Concessionaire is free to fix its Fee; but for the rail services with a “Ceiling Fee” it shall respect the limit of BRL 0.49 (which in today’s [26 July 2013] exchange rate amounts to USD 0.22) per kilometer.
  • The Concessionaire is fully and exclusively responsible for all risks related to the concession (e.g., volume of passengers, obtaining licenses, raise in the cost of capital, exchange rate oscillations, among many others).
  • The Concessionaire is not responsible for the following risks: errors in the Executive Project; terms, obligations, payments and costs related to the construction and availability of the TAV; previous environmental licenses, among many others).
  • The Concessionaire may only claim reestablishment of the financial and economic equilibrium of the contract in cases where it did not bear the risk of the concession according to clause 28.2, provided that the respective event has actually altered the originally agreed conditions.
  • The procedure for reestablishing the financial and economic equilibrium cannot alter the original allocation of risks, and shall be achieved by means of neutralizing marginal cash flows.
  • A Technical Commission will be established to resolve disagreements of a technical nature. Those relating to economic-financial matters are left outside of the scope of the Commission. Any controversy or dispute that cannot be solved amicably or through negotiation between the parties or by the Technical Commission will be solved through arbitration (ICC), except those relating to economic-financial issues.

Tracking Reference:

Brazil _Concession for High Speed Train bw Rio de Janeiro and Sau Paulo (Concession Agreement)_Portuguese.pdf

Brazil_Concesssion for High Speed Train bw Rio de Janeiro and Sau Paulo (Shareholder Agreement)_Portuguese.pdf

Image by Pixabay

Updated: October 5, 2021