SAO PAULO, April 23 (Reuters) - Brazil’s largest railroad operator Rumo Logistica SA on Thursday announced a plan to invest 7.4 billion reais ($2.46 billion) in the next five years to increase capacity and cope with higher agricultural production in the country.
The plan has two phases, the second being the largest in scope and dependent on financing from the BNDES national development bank and renewal of some government concessions, Rumo executives said.
Rumo is a subsidiary of Cosan SA, which is Brazil’s leading sugar and ethanol producer through its partnership in Raizen, a joint venture with Royal-Dutch Shell .
Rumo concluded a merger with America Latina Logistica (ALL) earlier in 2015. It now operates 13,000 km of rail lines in Brazil and has an elevation capacity of 19 million tonnes a year at Santos, Latin America’s largest port.
The first phase of the investment plan will run from now until the end of 2016 and involve 2.8 billion reais ($933 million) in capital expenditures, from which 50 percent is already secured. It will focus on new wagons and locomotives - the company is buying GE’s AC44 engines - and improvements to rail lines.
The second phase, from 2017 to 2019, is projected at 4.6 billion reais ($1.53 billion) and will target new yards, port terminals and duplication of rail lines.
“The first part of the plan is already under way, but for the second part we still depend on concession renewals,” said Rumo’s chief executive, Julio Fontana, referring to the licenses to build and operate rail infrastructure.
Brazil’s government has started discussions with rail operators and said it is open to concessions renewals if the agreement includes investments on expanding transport capacity.
Brazil has struggled with transport infrastructure for lack of sufficient investments in the past and substantial growth in agricultural production.
Rumo handled 42 percent of all grain exports in Santos in 2014 and 19 percent of sugar loadings. (Reporting by Marcelo Teixeira; editing by Gunna Dickson)