Sao Paulo Metropolitan Trains Lines 8 and 9

BRA Sao Paulo Line 89 Concession.jpg
BRA Sao Paulo Line 89 Concession.jpg


  • Sao Paulo metropolitan train lines 8 and 9 include 71 km of metropolitan rail, carrying more than 1 million passengers per day pre-COVID-19. The lines cover an area from the Amador Bueno station in the city’s far north-west to Grajau station in the city’s south, and have 38 existing stations, three of which are integrated with the city’s inner-city Metro service.
  • The concession of passenger transport services is for the operation, maintenance, upgrade of services and stations along these two lines, and the supply of rolling stocks and signalling systems. It aims to provide an improved mass transit experience for travellers through renovated stations, new rolling stock, and upgrades to electrical and signalling systems.
  • A BRL980 million (USD175 million) bid was made by the successful bidders at auction on the Brazilian Stock Exchange. The successful bidders, Via Mobilidade CCR and Grupo Ruas, will hold the concession for 30 years. It is estimated they will inject BRL3.2 billion (USD650 million) in private capex into the system as part of the upgrades.


  • Sao Paulo is the fourth largest city in the world, with a population of over 21 million, and has grown by 1.3% per annum over the past two decades.[3]
  • Promoting urban sustainability has been a key component of the municipality of Sao Paulo’s 16-year strategic masterplan (released in 2014). The Line 8 and 9 concession aligns with this by seeking to combat urban sprawl, traffic congestion, and increased distances and travel times.[4]
  • Fiscal restriction in government policy has resulted in reduced long-term public credit to fund large infrastructure projects, despite a clear need for continued capital in this sector. Brazil’s infrastructure represents 2% of GDP, compared to 5.5% in India and 7% in China.[5]
  • A new management model for the Brazilian Development Bank (BNDES) has resulted in less participation in financing of infrastructure projects.[6]


  • Strong institutional advisory support was sought in the early stages of planning. This included the International Finance Corporation (IFC) as the lead transaction advisor, use of international and domestic legal consultants, demand forecasts from three different entities (MCrit, Urban Systems and JMSouto), and an external social / environmental advisor.
  • A clear, transparent bidding process was implemented. The auction would be won by the bidder who paid the highest upfront fees, and detailed analysis regarding capital and operating expenditure for the bidders was provided. There were clear requirements for bid members, and bidders could be international / domestic, and singular / consortium.
  • The demand sharing mechanism under S.35.3 of the contract spread the risk between the grantor and concessionaire. If demand was lower or higher than forecast, this would trigger a financial rebalancing, based on the discrepancy between the forecast and actual figures:
    • For actual demand within 15% of forecast figures, there would be no rebalancing.
    • For actual demand within 15-25% of the forecast figures, the government would compensate the private partner for 60% of the reduced fares where demand did not meet forecasts, or take 60% of the proceeds from fares if demand exceeded forecasts.
    • For actual demand within 25-40% of forecast figures, the government would compensate the private partner for 90% of reduced fares where demand did not meet forecasts, or take 90% of the proceeds from fares if demand exceeded forecasts.
    • Note: these rules applied from the second year onwards. In the first year, financial rebalancing occurred from any diversions >5% from forecast figures. This was implemented to mitigate the ongoing impacts of COVID-19 on travel demand.
  • Use of reference guidelines for mandatory investments gave the concessionaire freedom to implement more efficient and creative solutions, such as:
    • Using established risk allocation practises (e.g. the World Bank-aided risk allocation matrix created for Lines 6 and 18)
    • Outlining clear guidelines for rolling stock purchase and trains refurbishment, including the exact fleet composition
    • Establishing key performance indicators in a previous public-private partnership (PPP) (Line 4), including intervals between trains, average travel times during peak hour, compliance with the scheduled offer, accidents, crimes, non-travel time spent in the station, and user satisfaction survey.
  • An independent auditor and independent verifier are to be used to monitor contractual execution, until a new regulatory agency is established. This supports the Sao Paulo government’s inspection and monitoring of the concessionaire against Contract Performance Indicators.
  • Rules for indemnity for early termination, including fixed grants, are to be paid by the concessionaire.
  • The possibility of contractual termination by arbitration exists.
  • The contract contained a transfer of completion clause to allow the concessionaire to request responsibility for the completion of the government component of the Line 8 and 9 renovations (specifically, the Line 9 extension, construction of two stations, and upgrade of three stations). Executing this clause would also involve the transfer of any remaining funds for the works from the state government to the concessionaire.
  • The contract protects against future real estate taxes under clauses 35.4.2 and 35.4.4, which state that any court-ordered real estate tax payment made by the concessionaire will be recovered through an adjustment to the technical tariff paid to the concessionaire, until the payment has been fully recovered.


  • Public
    • São Paulo Metropolitan Trains Company
    • Sao Paulo Metro
    • Government of Sao Paulo
    • IFC
  • Private
    • Bidder consortium: Via Mobilidade CCR and Grupo Ruas
    • Private operators of other Metropolitan Train lines: Viaquatro, Move Sao Paulo, Via Mobilidade
    • External forecast consultants: MCrit, Urban Systems and JMSouto
    • External legal consultants: Milbank, Machado Meyer   


  • October 2015 – Project opened through unsolicited private proposal (Triunfo Participaçoes) - Unsolicited proposal RFP is published in the Official Gazette, to call for other proposals
  • September 2017 – Further proposals delivered by three other authorised unsolicited proponents and published by the government; concession model proposed to make project financially sustainable
  • February 2019 – New State Working Group created to review concession model and make it sustainable without additional government funding
  • September 2019 – IFC’s CASA signed
  • February 2020 – Public consultation held
  • December 2020 – Request for proposal published
  • April 2021 – Auction held and concession winner announced

Results / impact

  • This project attracted greater private sector involvement in the bidding process, with new national and international bidders, making this the bidding process with the largest participation in Brazil, allowed for an auction through the Brazilian stock exchange.
  • The model provides private sector participants with greater downside risk protection, leading to greater interest and higher project valuation (the winning consortium paid a 202% premium compared to the minimum bid).
  • Private sector investors are protected from lower-than-expected demand or further COVID-19 usage shocks by the demand sharing mechanism, and its minimum internal rate of return of 4.5%.[7]

Key lessons learnt

  • Risks can be identified early in the design process by using specialised consultants for the different elements of the project planning – such as demand, environmental, and legal – to allow for more transparent discussions with potential private investors.
  • Detailed financial analysis and a transparent bidding process increases private sector interest and may lead to a premium being paid for concessions.
  • A demand sharing mechanism can encourage private sector investment by providing an investment return floor and protection against poor asset performance or overly optimistic forecasts.
  • A transfer of completion clause grants the private sector the capacity to take more control over the project if there are delays in the government works.
Last Updated: 15 October 2021