UPDATE 2-Brazil delays two big rail projects until third quarter 2020

Brazil pushed back the auction of two major railway projects for grain exports until the third quarter of 2020, Infrastructure Minister Tarcisio Freitas said on Friday as he announced plans for 101 billion reais (24 billion) in investment next year.

Freitas said drawing up the concession model took longer than expected, but the auction rules have already been submitted to Brazil's Federal Accounts Court, the TCU, for approval. The 1,142-km (710-mile) Ferrograo railway is expected to transport agriculture products from the largest soy-producing state of Mato Grosso to northern river port Miritituba in the Amazon basin. The 537-km FIOL railway is designed to transport mineral and agriculture products from the country's interior to a Bahia state port on the Atlantic coast.

The government had planned to auction off the two licenses to complete and operate the more than 1,500 kms of the railway in the first half of 2020. Freitas told a news conference that foreign investor interest in Brazil's drive to improve deficient infrastructure was high and the government hopes to raise the 101 billion reais in investment with 40 projects that will be auctioned next year.

The concessions to be auctioned in 2020 include 22 airports, nine port terminals, seven highways, and the two railways. Freitas said Chinese companies were particularly interested in the FIOL line. "The Italians are looking at lots of roads, the Germans are looking at railways, and the Chinese are looking at everything," he said.

Freitas' biggest contribution to the soy-farming sector this year was paving a missing 50-km stretch of the BR-163 that runs from Mato Grosso to the Miritituba port on the Tapajos river. During the rainy season, lines of trucks carrying soy beans would get stuck in the mud for days blocking other shipments. Now that the road is fully paved, freight costs have come down below the costs to ship via the port of Santos, he said.

Brazil will go ahead with repaving the BR-319 highway that runs through the Amazon region from Porto Velho to Manaus, a controversial project because it runs through the pristine jungle. The road was built by the military in the 1970s but abandoned, and parts are overgrown and others impassable in the rainy season. A concession for a first 50-km section will be auctioned early next year when environmental impact studies are completed, Freitas said. The highway is needed by inhabitants in the region, he said, and will not be used to transport grains that will continue to use the Madeira riverway.