The Brazilian government announced on Tuesday details of the portfolio of concession contracts for highways and freight railways that will be auctioned over the next year and which could generate future investments of around 800 billion (bi) reais (US$150bi).
As part of this agenda, the federal government plans to hold eight railway auctions in 2026, which should leverage approximately 650 billion reais in investments in the sector, with 140 billion reais earmarked for the installation of approximately 9,000 kilometers of tracks to be granted in concession.
In the highway sector, 14 concession contracts will be auctioned, covering 7,295 km of highways, with a projected investment of 158 billion reais in these contracts.
"I would say that the highlight of our plan concerns railways. Long-term investments compete with each other and, obviously, the highway portfolio, given the maturity of these contracts, has a higher level of confidence, lower capex, and a more consolidated market knowledge," said Renan Filho, Minister of Transport, at a conference.
"As we have made significant progress in recent years on the highway concession agenda, the attractiveness of this segment's portfolio tends to decrease, and now the railway portfolio is in a better position to compete with the highway portfolio. BNDES can help with financing, and railway contracts will have contributions guaranteed by the Union. Previously, the absence of guarantees undermined the credibility of the model," said the minister.
In recent years, Brazil has made rapid progress on the agenda of concessions for highways and other sectors. However, in the case of freight railways, the agenda has not yet advanced solidly, given existing challenges.
"The rail sector still faces a set of structural risks that limit private appetite. The first is demand uncertainty, directly associated with the dynamics of agribusiness and mineral commodities, which are highly sensitive to international cycles. The second risk stems from the dependence on long logistics chains, which require integration between ports, terminal operators, yards, and transshipment operators," Alberto Sogayar, a lawyer specializing in infrastructure at the firm Sogayar e Alcântara Advogados, told BNamericas.
"Another critical element is the regulatory uncertainty related to the use of infrastructure by third parties, especially regarding right-of-way, integrated operation, and access fees. The high initial investment, with engineering risks associated with extensive linear works, also weighs negatively. Finally, the rail sector has not yet consolidated remuneration models that reconcile financial stability with clear incentives for efficiency, which reduces competitive appetite when compared to the road sector, where the recent learning curve is much more consistent," said Sogayar.
The federal government recognizes these challenges and intends to replicate in the railway sector some models adopted in the highway sector. As part of these efforts, the government plans to maintain constant dialogue with sector participants to improve the contracts to be offered.
The eight railway projects planned for auction next year are the Minas-Rio de Janeiro Corridor, with a tender scheduled for January 2026 and an auction in March 2026; the Southeast railway ring, known as EF-118 , with a tender scheduled for March and an auction in June; in addition to the Western Network ; the East-West Corridor; the Ferrogrão ; the Southern Network – Paraná-Santa Catarina Corridor; the Southern Network – Rio Grande Corridor; and the Southern Network – Mercosur Corridor.
Highways
In the highway sector, the government is expected to auction off six contracts in the first half of 2026: Rota dos Sertões (BR-116/BA/PE); Régis Bittencourt (BR-116/SP/PR); Rotas Gerais (BR-116/251/MG); Rota Agro Central (BR-070/174/364/MT/RO); Rota Arco Norte (BR-163/MT/PA); and Rota do Pequi (BR-060/153/DF/GO).
Another eight contracts will be auctioned in the second half of the year: Southern Coastal Route (BR-116/376/PR and BR-101/SC); Southern Port Route (BR-116/392/RS); Southern Plateau Route (BR-116/PR/SC); Transbrasiliana Highway (BR-153/SP); July 2nd Route (BR-116/324/BA); Integrated Highways of SC – Lot 01 (BR-153/282/470/SC); Integrated Highways of SC – Lot 03 (BR-153/282/480/SC); and Southern Integration Route (BR-116/158/290/392/RS).
Financing
The government wants to give greater traction to the concessions agenda with support from financing solutions from the national development bank, BNDES .
"BNDES has created mechanisms to provide access to financing for investors, even in a challenging environment with high interest rates. Historically, BNDES financed R$22 billion annually for railway sector projects. Last year we already financed R$23 billion and this year we should reach a total of R$30 billion financed, remembering that we did this even in an environment of high interest rates," said Luciana Costa, director of infrastructure, energy transition and climate change at BNDES, during the presentation.
According to the executive, BNDES will seek to structure longer-term financing lines to meet the needs of railway projects.
"Today our credit lines go up to 35 years, perhaps we will have to seek funding in international markets with longer terms, because railway projects demand these longer terms," said Costa.
BNDES has been heavily involved in financing infrastructure projects in the country, including obtaining external resources to extend its loan terms.
(The original version of this content was written in Portuguese)
