More on the Philippines will be forthcoming, but first we have news on Brazil's high-speed rail project, aka the TAV. It looks like it will probably go ahead, with the first tenders out next month. The route will connect Rio and Campinas via São Paulo, passing through both of the big cities' international airports. (I don't know how the TAV will fit in with the planned express train between Guarulhos Airport and downtown S.P.) The construction cost is estimated at R$34.6 billion, and operating costs are expected to be around R$214,000 per mile, with total running costs around R$1.1 million per mile.
Currently around 7.3 million people travel between the two cities every year, 60% of them by air. The planners expect that the TAV will immediately capture 3.5 million Rio-S.P. passengers. By 2014, they expect that number to rise to 6.4 million, plus an additional 11.8 million travelling intermediate routes.
Do those numbers make sense? Let's ignore the S.P.-Campinas portion; if some part of the project is not going to get built, it'll probably be that one. We have an estimated construction cost of R$27.9 billion. Brazilian government bonds yield about 13% in local currency. Inflation is running around 5%, so let's say a quick-and-very-dirty capex of R$2.2 billion. Add to that an operating cost around R$0.3 billion per year. So, total costs of R$2.5 billion per year, divided by 18.2 million passengers: R$138 per passenger ... much less than the R$400 that the plane will cost you. (On average, of course; you can get deals if you're lucky, but the flying experience in Brazil makes the U.S. feel smooth and comfy.)
For our American readers, R$138 is about $72; not an unreasonable number. It is also probably an overestimate, considering as our capex estimate is unrealistically high and the Brazilians' own running-cost numbers are off the charts in international terms. The unanswered question, in my mind, is whether the system will attract 12 million people to take those regional trips.
Even so, the numbers on this project look sensible, especially given the environmental benefits from getting people out of their cars and the economic benefits of freeing up space at the region's big airports. And then there is the value of saved time. This is a project that seems to work as a commercial proposition. The positive externalities are gravy. Unlike the Argentine tren a ninguna parte, the Brazilian TAV actually travels between two large and interconnected cities in a rapidly growing urban corridor.
I am a passenger rail skeptic, more so in countries like Brazil, which desperately need things like cargo trains and school buildings. But this doesn't seem to be just a World Cup prestige project (although there is that) but a fairly smart expenditure of public money.
Maybe the future really will get to Brazil. A bit late, but better than never.
First of all, how about a high speed triangle train in Mexico, from DF to Guadalajara to Monterrey back to DF? Has anyone ever talked about anything like that in Mexico?
Also, are you going to the game tomorrow? Could we get a post on the atmosphere in Azteca if you are going to be there?
Posted by: pc | August 12, 2009 at 12:45 AM
Hey, Gancho,
There was very serious talk of a TAV between Mexico City and Guadalajara, but the Fox Administration decided to cancel the project in 2006. At a projected cost of US$12 billion (although some estimates were much lower) it didn't seem worth the investment.
Posted by: Noel Maurer | October 24, 2009 at 02:33 PM