High Speed Rail in Brazil: The Need for Guarantees

In an article entitled Fourth Time Unlucky, The Economist wonders why Brazil, with "a long list of more worthwhile infrastructure projects", does not dismiss high speed rail "out of hand."

After three unsuccessful attempts to attract international bidders to build its Rio de Janeiro to Sao Paulo and Campinas line for a bargain basement price, the nation has decided that taxpayers will foot some (probably all) of the bill.

The Economist continues:

"Everywhere, new-build rail projects are horribly likely to come in way over budget and to be used much less than expected. A 2009 paper by Bent Flyvbjerg of Oxford’s Saïd Business School, ominously entitled "Survival of the Unfittest: Why the worst infrastructure gets built—and what we can do about it."

As Flyvbjerg and others have noted, promoters, whether private or public, often seem to have a simple goal: to get the line under construction. That positions the projects for taxpayer bailouts when they run into problems.

With bidders able to call upon other people’s money (taxpayer’s money) this time, it seems likely there will be takers. And, based upon the experience with major infrastructure projects around the world, that will be just the start of the taking.

If elsewhere provides any guidance, the winning bidder can be confident that, down the road, the captive customer (the taxpayers) will pay any cost overruns. At the same time, the routine could be repeated in which a government kicks and screams, claiming it had no warning.

They did. In this day and age, a link to the Economist’s warning is forever. A wise government will obtain the unlimited guarantees any company involved in the winning joint venture. Only then will Brazil’s taxpayers be protected.

Comments

56 responses to “High Speed Rail in Brazil: The Need for Guarantees”

  1. lyle Avatar
    lyle

    Promoters of railroads since Thomas Durant of the Union Pacific have figured that you make the money off the construction of the railroad, and don’t worry about the operation. Nothing new here, the same perceptions have existed for at least 150 years. You figure out how to overcharge on the construction to make your money. The big 4 of the Central Pacific/Southern Pacific did the same thing, with the Construction and Finance company.

  2. PhilBest Avatar
    PhilBest

    Famous “systems analysts” like Jesse Ausubel, Nabojsa Nakicenovic, Cesare Marchetti, Arnulf Grubler, and Robert Herman, have been saying for years that the rail mode is near the END of its “Kondratieff cycle”. Automobiles are approaching “saturation”, and a new mode is “due”.

    Contrary to the Luddites who boost rail as a mode, the validity of “investments” in rail has probably never been LOWER.

    I would counsel governments like Brazil’s to “wait and see”, with a open mind; maybe Mag-Lev is the “new mode”, maybe driverless cars or “dual mode” cars are. The sheer stupidity of “investment” at this time, in 19th-century technology, will be apparent to all in a decade or two.

  3. David12 Avatar
    David12

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  4. Parakeet Avatar
    Parakeet

    A high speed train in Brazil would be a dream come true because traveling would become much more easier for everyone. I hope this decision is also implemented upon. almanca a1

  5. Budgerigar Avatar
    Budgerigar

    Brazilians would breath a sigh of relief if it is implemented well. Traveling from one place to another would become much more easier and hassle free. Kudos to the government. Unbiased Reviews

  6. CashewNuts Avatar
    CashewNuts

    Distance doesn’t matter when you’re traveling on high speed railway. I prefer is over plane ride. You get to enjoy all the scenic beauty at very less cost. Hope this is implemented in Brazil very soon. Property in Bangalore

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      Likely I want to bookmark your blog . You surely have beneficial article content. Thanks a bunch for sharing with us your website page.
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  7. Loveland Avatar
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    Lets just hope that this gets done instead of remaining on paper. It will be a sigh of relief for most people in Brazil and it will be a great addition to tourism industry. Hair Salon Loveland

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