Sao Paulo Metro - Orange Line

Cancelled

Failure

In November 2013, Consorcio Move Sao Paulo, a partnership of the Brazilian companies Odebrecht (19.6%), Queiroz Galvao (19.6%), UTC Participacoes (13.1%) and Eco Realty Fundo de Investimentos (47.7%), won in a competitive bidding process the right to build and operate the 16-km metro line (Line 6 - Orange) connecting Sao Joaquim and Brasilandia located at the municipality of Sao Paulo (state of Sao Paulo). The 25-year PPP contract was signed with the state government in December 2013. The bidding criteria was the lowest management fee to be paid by the government to the sponsors. Consorcio Move Sao Paulo, the only company that took part in the bidding process, offered US$ 258 million per year (BRL 607 million), 0.004% below the ceiling set by the government. In addition, the sponsors were granted the right to keep part of the resources collected with the user fees. The government also agreed to pay for the land displacement. The sponsors created the company Concessionaria Move Sao Paulo to lead the project. The investment was estimated at US$ 3.786 billion (BRL 8.9 billion) over the life of the project. Financial closure was achieved in June 2014, when the state-owned bank BNDES approved a US$ 1.902 billion (BRL 4.47 billion) loan to finance the project. The state government agreed to contribute with 13% of the project costs and the private sponsors were set to contribute with 46.9% in equity. Construction works were underway as of December 2014. Operations were expected to commence by June 2020. The project was granted the right to take part in the government program called Regime Especial de Incentivos para o Desenvolvimento da Infra-Estrutura (Reidi). Companies selected to take part in this program were given tax cuts in the acquisition of capital equipment and construction material acquired both in the domestic and international markets (this incentive represented a cost reduction of about 9.25%). In addition, the company was allowed to use accelerated depreciation methods of accounting for construction expenditures. The concessionaire Move São Paulo (Move SP) halted construction works in 2016. The government has since tried several times to end the concession, which finally expired on 7 July (2020). A new concessionaire was signed later on.

Transport

World Bank Group

Project

Mass Transit, Commercial, Steel, Consumer Products, Rail, Government, Manufacturing (Industrial)