BRASILIA, (Reuters) – President Dilma Rousseff unveiled a plan yesterday to draw 198.4 billion reais ($64 billion) in private investment to build, upgrade and operate Brazilian roads, railways, airports and harbor terminals.
The infrastructure plan could help restore growth to Brazil’s faltering economy and raise Rousseff’s popularity, which has been battered by high inflation, rising unemployment and a corruption scandal at state oil company Petrobras .
The World Economic Forum ranks Brazil only 120th out of 144 countries for overall quality of infrastructure, with roads and air transport being especially bad – a shortcoming long seen as a drag on productivity and efficiency.
The plan aims to correct the failings of previous concession sales which drew scant interest because of excessive state intervention.
Rousseff is offering investors better terms this time, though low-cost financing from development bank BNDES has been reduced in the midst of Brazil’s fiscal crunch. Bidders will be expected to partially fund projects with private financing raised through infrastructure bonds.
Rousseff said the new round of concessions will expand the government’s partnership with private companies and bolster confidence in the economy, now on the brink of a recession that is expected to be the worst in 25 years.
“Our model of concessions will guarantee that consumers get quality services at fair prices and companies get an adequate return on their investments,” Rousseff said during the presentation at the presidential palace. A previous effort by Rousseff to lure 210 billion reais in private investment in 2012 managed to attract only about 20 percent of the targeted funds, with no bidders at all for the 14 railways and 160 port terminals on offer.
Private consortia will be invited to bid for airports in the cities of Porto Alegre, Fortaleza, Salvador and Florianopolis, and the stake of state airport agency Infraero will be reduced to minimum of 15 percent from 49 percent in the previous round, involving Brazil’s busiest airports.
Aviation Minister Eliseu Padilha said Infraero would be restructured and an airport services company created in partnership with Germany’s Fraport.
The new concessions include about 2,715 miles (4,371 km) of highways, the expansion of existing freight railways and the building of new ones on a free access model, to help Brazil’s powerful agribusiness get soy beans and other commodities to market.
The concessions also include unfinished parts of the North-South railway started 30 years ago and sections of a railway China is interested in building across the Andes to the Pacific coast of Peru to shorten the distance to Brazil’s largest market.
To decongest Brazil’s inefficient ports, Brazil will open 29 state-owned port terminals to private operators in Santos, the country’s largest port, and in the state of Para. A second round of auctions will include terminals at Paranagua, Itaqui and other ports. The government expects 66.1 billion reais in investments in highways, 86.4 billion in railways, 37.4 billion in ports and 8.5 billion in airports. Auctions for the airport concessions will start in the first quarter of 2016.
BNDES will continue to have a “relevant” role in financing infrastructure building, Rousseff said, providing low-cost financing of up to 70 percent of project costs for railways if private financing is raised.
