New Malha Oeste tender may feature scaled-down railway

New Malha Oeste tender may feature scaled-down railway Rumo concession ends in 2026 and government plans to submit new model to public spending watchdog early next year; Suzano seen as potential bidder By Taís Hirata — São Paulo 12/26/2025 07:29 PM Updated 5 hours ago Malha Oeste, a railway linking Mato Grosso do Sul and São Paulo, is expected to be put out to tender again in 2026, with the possibility of a significant downsizing from its original design. Under the proposal, investors would be allowed to bid either for the entire network—currently spanning 1,974 kilometers—or for smaller “sublots” covering shorter stretches. Brazil maps R$148bn in infrastructure auctions for 2026 According to George Santoro, executive secretary at the Ministry of Transportation, the project will be submitted to Brazil’s public spending watchdog TCU in early 2026. The federal government aims to publish the tender notice in April and hold the auction in July. Studies show that operating the full network would require around R$35.7 billion in investments. Market participants say bidders are unlikely to be interested in taking on the entire stretch. The railway is currently held by Rumo, the logistics arm of Cosan, but is largely idle. In 2020, the company joined a process to return the concession, which ultimately did not move forward—according to sources, one obstacle was the difficulty of structuring a new auction for the network. The contract expires in June 2026, however, making a new tender unavoidable. The “sublot” structure was proposed by the government as a way to attract private-sector interest in at least part of the railway. In addition to the full lot, an “intermediate sublot” is expected to be offered, running from Corumbá (Mato Grosso do Sul) to Bauru (São Paulo), where it would connect with the Malha Paulista, another railway operated by Rumo. If there is no interest in that stretch, bidders would have the option to bid for an even shorter segment within Mato Grosso do Sul only, from Corumbá to Três Lagoas, on the border with São Paulo. “For the first stretch [from Corumbá to Três Lagoas], we are certain there will be bids. There’s no doubt, because of pulp cargo,” Santoro said. “For the other two stretches—the one to Bauru and the full network—I’m not sure. This was the solution we found. The project structurer says the full stretch is viable, but we need to test the market.” The competitive model is expected to mirror recent power transmission auctions, in which “sublots” are offered alongside the full asset. Under this format, the arrangement that is most advantageous to the public sector and attracts the greatest investment prevails. In the case of the railway, if a group is willing to take on the larger stretch, it would beat bids limited to smaller sublots. According to sources, pulp producer Suzano is seen as a potential bidder, though likely only for the smallest segment. The company already has an adhesion agreement with the government to build a private rail spur under the authorization regime between Três Lagoas and Aparecida do Taboado, where it would also connect to Rumo’s Malha Paulista, which runs to the Port of Santos. Rumo is cited as a possible partner in that project. In recent years, the government explored the possibility of renegotiating the contract with the company. In those talks, the operator argued that making the stretch viable would require slimming down the line and focusing on pulp transport. The negotiations did not advance. Contacted, the company declined to comment. In a statement, Suzano said it is following the process with the expectation that “some railway concessionaire will be willing to take on the investments needed for the stretch linking Ribas do Rio Pardo to Três Lagoas.” Regarding the segments for which the company already holds rail authorizations, Suzano said the conceptual design of the spurs has been completed and that the next step will be a technical, economic, and environmental feasibility study, followed by detailed engineering. Even the leanest sublot under consideration presents challenges, sources say. The section from Corumbá to Campo Grande is not seen as attractive. The idea is that the concessionaire would not be required to operate services along that part of the line, but only to maintain the existing infrastructure, which has deteriorated significantly due to a lack of investment.