Brazil wants private sector for $66bn road, rail boost

The government will tender close to 7,500km of highways and 10,000km of railways to the private sector, with nearly $40bn of projects to be awarded over the next five years. Airports and ports will soon get their own programme, the government said.

“Brazil will finally have infrastructure compatible with its size,” crowed Brazilian President Dilma Rousseff yesterday, following the announcement of a 25-year, R$133 billion (€53.5 billion; $65.7 billion) transport infrastructure programme, to be financed by the private sector.
 
Embracing private capital with a pledge “to use the best of private initiative and the best of the Brazilian government,” Rousseff outlined a plan to award nearly 7,500 kilometres of highways and 10,000 kilometres of railways via concessions and public-private partnerships (PPP).
 
On the roads front, concessionaires will have to expand capacity, upgrade and refurbish nine highways across the country, to be funded with user tolls, effectively doubling the capacity of the country’s main highways. A total of 12 railway projects will be tendered as PPPs, the government said. Both sectors will benefit from low-interest, long-term loans from state-sponsored institutions like BNDES, the government said.
 
The bulk of the roads and railways investment will take place over the next five years, with R$79.5 billion of projects to be awarded during that time period – R$56 billion of railway projects and R$23.5 billion of highway deals. According to a government presentation, the bulk of the highway projects will be auctioned during December/January with the railway projects starting to be auctioned in batches from April 2013.
 
Rousseff also signalled that the highways and railways programme would be followed by a similar plan targeting the country’s airports and ports. “We are starting with railways and roads, but obviously we will take care of airports, ports and waterways,” the Brazilian President said yesterday.
 
Brazil, which overtook the UK this year to become the world’s sixth-largest economy, is struggling with a precipitous fall in growth, recording 2.7 percent growth last year after having expanded by 7.5 percent in 2010. This year, the country is expected to grow 2 percent, possibly even less. Rousseff said she hopes the transport programme will help to jump-start growth.
 
The South American country will be hosting the soccer World Cup in 2014 and the Olympic Games two years later, with Rio de Janeiro taking the Olympic flame from London.