To help address a budgetary crisis inearly 1995, the Rio de Janeiro state government beganreforms aimed at selling or concessioning to the privatesector loss-making state-owned enterprises. In the transportsector this meant selling or concessioning subway,commuterrail, bus, and ferry services, at the time requiringsubsidies of US $363 million annually. This note describesthe concessioning of Rio's subway, the Metro, inDecember 1997 and its commuter rail service, Flumitrens, inJuly 1998. Together they accounted for 80 percent of thesubsidies. The reform was expected to eliminate subsidiesfor the Metro and reduce them by two-thirds for Flumitrens,to improve service, and to clear the backlog of maintenanceand investment.