RAILWAYS RESTRUCTURG

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The Federal Railways Restructuring and Privatization Project aims to reduce the cost of freight transport in Brazil's main corridors by restructuring and privatizing the federal railways. Specific objectives are to: 1) improve performance by restructuring and concessioning Rede Ferroviara Federal S.A.'s (RFFSA) operations to private operators, and by restructuring its finances to settle debts and labor liabilities; 2) increase productivity through staff retrenchment and emergency rehabilitation of critical assets in order to make the proposed concessions viable, while minimizing the social cost of staff retrenchment; and 3) enhance competition through regulatory reform, with a view to increase the railways market share and reduce freight transport rates. The project will consist of the following six components: 1) operations restructuring and concessioning component; 2) staff retrenchment program; 3) emergency rehabilitation program; 4) environmental management component; 5) regulatory reform component; and 6) financial restructuring and settlement component.