The attractiveness of investments in railways in Brazil

Abstract

We analyze the main factors influencing the attractiveness of public-private partnerships (PPP) applied to Brazil. Considering the Brazilian regulatory framework, the risks involved in a railroad PPP in Brazil are quantified and the attractiveness of this investment is evaluated through Monte Carlo simulations. Results suggest that Capex and regulatory risks are the main obstacles to PPP projects in Brazil. In addition, measures have been proposed to be implemented by the government to improve the return of these enterprises. New attractiveness analyses confirm a reduction in venture risk with the proposed measures.