The Salvador Light Rail Vehicle (“VLT”) project in Brazil has become one of the most closely watched urban mobility initiatives in Brazil. Its trajectory — from a troubled public-private partnership (“PPP”) to a state-led infrastructure programme — raises three central questions: whether the project is now structurally de-risked after earlier contractual failures; whether funding and execution are sufficiently robust to meet delivery targets; and how political dynamics ahead of the 2026 election could affect continuity.  

Originally conceived as a replacement for the suburban railway linking Calçada to Paripe, the project was formally launched in 2017 by the Government of Bahia as a PPP. Reporting by G1 (a Brazilian online news portal) detailed how the tender quickly encountered institutional friction. In 2018, the Court of Accounts of Bahia (“TCE-BA”) suspended the bidding process over irregularities, though a judicial injunction allowed it to proceed. In February 2019, the concession was awarded to Skyrail Bahia, led by BYD (a Chinese manufacturer operating across transportation, batteries and clean energy technologies), with an initial BRL 1.5 billion investment and a 36-month timeline. 

The PPP structure proved fragile. Scope changes and additional segments that were not fully accounted for in the original contract drove projected costs above BRL 5.2 billion by 2023 — a 246 percent increase from the initial estimate. The state rejected the escalation as excessive, while the concessionaire cited inflation and regulatory adjustments. In August 2023, Bahia terminated the concession; in May 2024, the TCE-BA formally declared the tender and PPP contract illegal, citing broader irregularities. 

A senior official at the Superintendent of Transport Planning explained that the project had undergone several structural modifications. Following mediation by the Federal Court of Accounts (“TCU”), Bahia reached an agreement with the state of Mato Grosso, which had abandoned its own VLT project in Cuiabá. Unused trains from that project were subsequently acquired by Bahia. The project was also restructured away from a PPP model toward execution under the RDC regime (there to streamline the bidding process for projects like public works and specialised services), allowing the state to directly manage construction before eventually transferring operations to a private operator.  

This shift from concession to state-led execution marked a structural reset. In December 2023, a new tender was launched, divided into three stretches with a revised BRL 4 billion budget and expected delivery by 2027. The first stretch runs from Ilha de São João to Calçada; the second connects Paripe to Águas Claras; the third links Águas Claras to Piatã, each integrating with Salvador’s metro network. 

The revised procurement process also faced judicial scrutiny. In March 2024, a court suspended the tender over alleged restrictions on consortium formation and technical qualification requirements. The injunction was overturned later that month, allowing the process to resume. Contracts were signed in June 2024 under an integrated contracting model, covering detailed design and construction. 

“The construction schedule is highly ambitious ... [the plan is] the project reaching 2027 with no less than 85–90 percent of the physical works completed.”

A civil servant at the Ministry of Finance, Brazil

Execution has advanced. The first test run took place in December 2025, with commercial opening of the initial section expected in the second half of 2026. As of August 2025, Stage 1 was 30 percent complete (updated to 50 percent in January 2026), Stage 2 stood at 17 percent and Stage 3 at 2 percent. A civil servant at the Ministry of Finance noted, “The construction schedule is highly ambitious. Even in a conservative scenario, it is hard to imagine the project reaching 2027 with no less than 85–90 percent of the physical works completed.”  

Financing has diversified following the PPP termination with funding for the first stretch secured through the federal PAC (New Growth Acceleration) programme. In September 2025, Bahia signed a BRL 600 million loan agreement with Caixa Econômica Federal (a major Brazilian state-owned financial institution) to support urban mobility projects, including the VLT. An additional BRL 446 million signalling and systems tender will be financed through Brazil’s federal budget. Governor Jerônimo Rodrigues has also discussed infrastructure financing with Dilma Rousseff in her role at the New Development Bank. 

At the national level, the project aligns with long-term transport strategy. A study cited by Valor International from BNDES (Brazil’s main state-owned development bank) estimates that Brazil will need up to BRL 500 billion by 2054 to expand medium- and high-capacity urban transport, nearly doubling metro networks and quadrupling Bus Rapid Transit (“BRT”) and VLT systems. VLT is positioned as an intermediate solution — higher capacity and service quality than BRT, but materially less expensive than metro systems. 

Political dynamics remain a defining variable ahead of the 2026 gubernatorial election. “Currently, the two main names are Jerônimo Rodrigues, running for re-election by the PT, and ACM Neto, of União Brasil.” The former senior manager in the public transport sector continued, “Jerônimo has the support of both the federal and state political machines … and is around ten percentage points behind in the polls. ACM Neto … holds around 40 percent voting intention.” 

 “The VLT is no longer seen as a project linked to a single political group; it has gained broader recognition as a collective-interest initiative, which significantly reduces the risk of discontinuity.” 

A legal expert in road and railway concessions, Brazil

ACM Neto has criticised delays and questioned delivery. Yet a legal expert in road and railway concessions suggested a broader institutional entrenchment, “The VLT is no longer seen as a project linked to a single political group; it has gained broader recognition as a collective-interest initiative, which significantly reduces the risk of discontinuity.”  

The Salvador VLT has transitioned from a contested PPP to a state-driven infrastructure programme embedded within federal financing structures and long-term national mobility planning. For multinational investors considering participation in Brazil’s mobility sector, perhaps the most prudent path is to evaluate opportunities across technology supply, systems integration and long-term service partnerships, while maintaining careful attention to financing arrangements, procurement rules and local stakeholder relationships so that investments do not accidentally derail.