TAV Rio de Janeiro-São Paulo will transport 32 million passengers/year

The construction of the TAV is important as it will contribute to solving bottlenecks in passenger transport between Rio de Janeiro and São Paulo. Currently, the Presidente Dutra highway, which connects the two cities, operates at maximum capacity, as do Congonhas and Guarulhos airports.

Without an initiative such as the TAV, the situation will tend to worsen in the coming years, both at airports and on highways, due to growth in the country. The TAV will address the problems from the expected increase in the number of both vehicles and airline passengers. Quick access to Campinas will make the Viracopos airport the third main airport in São Paulo.

Studies

The High-speed Train is initially expected to transport 32 million passengers per year and generate total revenue of over R$ 2 billion p.a.. Complete implementation is expected to take six years.

The estimated demand was projected by Halcrow-Sinergia consortium, winner of the international tender to undertake the TAV study. The result was also evaluated by additional studies conducted by the government and submitted to a methodology thoroughly assessed by experts from the Inter-American Development Bank (IDB), as well as by companies specializing in economic analyses of large projects, such as Nathan Associates.

The project as well as demand and revenue estimates were also appraised by experts from the Catholic University of Chile, considered one of the centers of reference in such studies.

The set of works included, over a course of two years, the performance of detailed studies concerning demand and engineering, as well as geological and geotechnical, economic, financial and legal studies, to ensure consistency throughout the project.

The costs of construction, rolling stock and other systems meet world standards when compared with cost per km. The figures represent, at an exchange rate of R$ 1.70 per US dollar, US $ 35.36 million per kilometer, which is within the margin of average global costs practiced in this type of venture.

According to reference studies conducted by the government, the average cost of high-speed train projects worldwide was US$ 32.7 million per km. The rugged terrain of the region requires more investments than those in lowland areas, justifying the higher estimate.

The entire technical studies concerning demand, alignment, geology, operation and economic-financial modeling are available at: www.tavbrasil.gov.br.

TAV Importance

The construction of the TAV will bring several benefits to the country, improving passenger transport between Rio de Janeiro, São Paulo and Campinas. It will also contribute to improving the standard of living and mobility in the region.

Another factor is the induction of economic development throughout its progress, as seen in countries where technology was implemented, in addition to the development of the national industry of railway components.

During construction  more than 12,000 direct jobs will be generated. Also noteworthy is the option for more environmentally-friendly transport.

The possible implementation of the TAV has been a subject of study for decades. The economical and geographical situation in Rio de Janeiro and São Paulo is considered a classic international case in the need for high-speed trains, comparable to one of most successful railways in the world, which connects Tokyo to Osaka, in Japan.

In the case of Rio and São Paulo, the metropolitan regions have 12 million and 19 million inhabitants, respectively, representing over 40% of Brazil’s GDP.

The TAV project is complementary to other modals, which is why it will require an increase in the subway system to meet demands created by the new train. In Rio de Janeiro, all expansion plans of the subway system and revitalization of the port region are converging with the implementation of the TAV at Barão de Mauá station.

In São Paulo, Campo de Marte, the site chosen for the TAV station, will increase the possibility of urban development, allowing future connections with the subway system.

The TAV will require availability of urban connections in major cities that benefit from the project, allowing the expansion of the transport network in such locations.

Conditions

The concession will be for 40 years, and the consortium responsible for designing, constructing, operating and maintaining the TAV will have to transfer the necessary technology to Brazil. The model defined by the Brazilian government was a public service concession, aiming at attracting capital and technical expertise, as well as management capacity and innovation in the private sector.

The implementation and operation of the TAV are capital-intensive, in addition to relying on technology and specific know-how held by a limited number of manufacturers and foreign operators.

– Private shareholders will have to contribute approximately R$ 7 billion.

– The total interest rate for funding may be reduced if the Gross Operating Revenue (GOR) in the first 10 years of commercial operation is below that expected in the financial feasibility studies.

– There may be a reduction in interest rates to offset any revenue below projections. The maximum value for renegotiation will be R$ 3 billion from the first to fifth year and R$ 2 billion from the sixth to the 10th year.

– The minimum interest rate resulting from renegotiation will be 3% per y.