Brazil Delays Bullet Train in Wake of Bus Protests

President Dilma Rousseff is delaying the auction of a proposed high-speed passenger train that would link Brazil’s two biggest cities in the wake of street protests over the government’s inability to deliver basic services.

The auction, which was originally scheduled for next month, was delayed for at least a year to give potential investors more time to prepare a bid, Transportation Minister Cesar Borges told reporters in Brasilia today. He didn’t provide a new date, saying only that it could take place after next year’s presidential election.

Millions of Brazilians took to the streets in June to protest an increase in bus fares that become a rallying cry for frustration with the quality of health care, education and urban transport in Latin America’s biggest economy. Even as Brazil spends 30 billion reais ($13.1 billion) on stadiums and related projects to host the 2014 World Cup, families are saddled with some of the world’s highest transportation costs and inflation of over 4.5 percent since 2010.

“This is one of those pharaonic projects that has no basis in reality,” Adriano Pires, the head of the Brazilian Center for Infrastructure, a consulting firm in Rio de Janeiro, said in a phone interview. “Delaying the auction is synonymous with killing it. Following the protests, the government doesn’t have the courage to go forward with such an unpopular project.”

Auction Delays

A bullet train connecting Rio de Janeiro and Sao Paulo was conceived during the 1964-1985 military dictatorship, when there was a proliferation of mega-projects including a 13-kilometer bridge and a highway cutting through the Amazon rain forest.

Former President Luiz Inacio Lula da Silva and his then cabinet chief Rousseff dusted off the project during the global financial crisis, saying the train could be operational by the time Rio hosts the 2016 Olympics.

Since then, the auction has been delayed several times due to a lack of investor interest while the proposed budget has more than doubled to its current 36 billion reais. That’s about equal to what the federal government planned to spend on education this year.

Borges today said the deadline for the train to begin service is 2020.

The government insists that the demand for the project is strong. Currently there is no rail link between Sao Paulo and Rio, meaning the more than 17.5 million residents of the two cities have to either travel more than five hours by coach or face frequent delays at the cities’ over-crowded airports.

The bullet train would cut travel time between the two cities to about 90 minutes.

Companies including Germany’s Siemens AG (SIE), France’s Alstom SA (ALO) and Spain’s state-owned rail company Renfe had expressed interest in the project, Borges said.

To contact the reporters on this story: Joshua Goodman in Rio de Janeiro at jgoodman19@bloomberg.net; Arnaldo Galvao in Brasilia Newsroom at agalvao1@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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