The professor also recommends amending the concession rules to create a separation between infrastructure and operation. In some cases, new railway trains will have to use the old network; however, the owners of the old network are not required to let the new railway use their lines. It is necessary to define who is going to be in charge of that negotiation, Ratton adds.

Another problem the government faces is balancing the interests of large companies, specifically in two strategic sectors: agribusiness and mining. This concern has yet to be resolved.

Shortage of Specialized Labor

In addition to regulatory issues, failures in the projects and in feasibility studies, there are other difficulties for investments in the railway network. After decades of neglecting to staff up the sector, there is a shortage of technicians and qualified labor. Now, Ratton says, “The hurry to have things done [immediately] pushes toward compulsive construction,” desite the absence of sufficient planning, which leaves contractual loopholes.

“Today, it is very hard to find qualified professionals in the railway industry. To fill that gap, operators end up by investing in personnel qualification,” says Gustavo Bambini, executive director of the National Association of Railway Carriers.

Investors lack confidence based on the track record, Bambini says. "The railway mode underwent a long decline between the 1950s and the 1990s,” he says, adding that those restrictions explain the request for more guaranties made by investors.

Near-term solutions seem far away. In addition to the difficulties in the new concessions, old projects also face obstacles and delays. The most serious case is that of the North-South Railway, which was launched in 1987 to link Pará to Rio Grande do Sul and is still far from being delivered. The stretch between Tocantins and Goiás, the last one built, was completed not long ago.

At Transnordestina railway, the situation is also critical. Started in 2006, the construction of 1,700 km should have been completed in 2010. The new completion date for the railway, which will connect Piau and Ceará, is now by 2017, for almost double the initial price, R$4.5 billion, or $1.9 billion.

By September, the construction work for the Transnordestina railway was being done by Odebrecht, but Transnordestina Logística S.A., a subsidiary of Companhia SiderúrgicaNacional, terminated the contract and alleged there were flaws in the project. Construction stopped, and the government has not yet demanded the work to resume. Today, cargo railways in Brazil total 27,800 km. Of those, more than 4,000 km are not fully operational.