Companhia Ferroviaria do Nordeste S.A.

Active

Prospective

In July 1997, Companhia Ferroviaria do Nordeste S.A. (CFN) won a 30-year concession to rehabilitate and operate the 4,534 km northeast section of the national railway system. In 1995, the Brazilian government decided to divide the national railway, RFFSA, into six exclusive regional systems and to offer a 30-year concession contract for each system. The first concession was awarded in March 1996 and the sixth in July 1997. Concessions were awarded on the basis of the highest bid above the government's minimum price. The concessionaire paid US$ 14.6 million for the concession rights. Unlike in Argentina, concessionaires have no control over initial employment decisions. CFN comprised: recently privatized mining company, Companhia Vale do Rio Doce (CVRD); industrial group, Vicunha; and Brazil's largest steel-maker, Cia Siderurgica Nacional. The sponsors are all railway customers. The consortium plans to invest US$ 36 million during the next five years, and more during the following 5 years if traffic volumes increase. Prior to takeover by the consortium the government reduced staff levels by 40%. The Brazilian Federal Development Bank (BNDES) approved a US$ 46.6 million loan to the construction works in February 1999 (R$ 79.3 million - 25% of the total investment); the remaining costs will be financed by Finor (50%) and with the sponsors' own resources (25%). In 2003, CVRD sold its stake in CFN to Cia Siderurgica Nacional and to Taquari Participacoes (a company of the Vicunha Group). After the transaction, Cia Siderurgica Nacional and Vincunha were holding 50% of the shares of CFN each. In 2008, CFN changed its name to Transnordestina Logística, a wholly-owned subsidiary of CSN. In 2009, Transnordestina started the expansion of the railway, which was expected to increase its capacity from 1,5 million tons per year to 30 million tons per year (the new segment length was set at 1728 km). The investment was estimated at US$ 2.7 billion (BRL 5.4 billion) to be financed with the sponsors' own resources (40%) and resources from federal government institution Sudene (49%), BNDES (4%), BNB (3%) and state-owned company Valec (3%). The construction works started in December 2009 and were still underway as of 2012. The investments undertaken by CFN, year by year were: 1998 – US$ 2.4 million (R$ 2.9 million) 1999 – US$ 5.6 million (R$ 10.1 million) 2000 – US$ 4.1 million (R$ 8 million) 2001 - US$ 9.3 million (R$ 20.7) 2002 – US$ 4.8 million (R$ 16.9 million)

Transport

World Bank Group

Project

Mass Transit, Government, Rail, Steel, Manufacturing (Industrial), Metal