5/07/2013

Infrastructure: Officials see new delays in infrastructure concession plans


Officials see new delays in infrastructure concession plans

By Rodrigo Pedroso and Guilherme Soares Dias São Paulo
Bernardo Figueiredo
The federal government's plans to offer infrastructure work concessions will be delayed, the president of the government's Planning and Logistics Company (EPL), Bernardo Figueiredo, said. The delay for the highways will be smaller than four months, but part of the auctions for the railway sector may only be held in 2014.
Regarding highway projects, Mr. Figueiredo said that the tender's rules for the 7,500 kilometers of federal highways to be privatized will be announced by August. The auctions, he said, will start in September. “The first lot of seven highways will begin to be offered in July; it was initially to be in March. It's four months late, but it's going to happen,” he said Monday during the 8th Logistics and Transport Meeting promoted by the São Paulo State Federation of Industries (Fiesp). A total of 13 federal highways will be offered, divided into nine lots.
Mr. Figueiredo also said that the “timetable exists to be followed,” but admitted there are limitations and a “learning curve” for the auctions. He says the tenders for BRs (as federal highways are known in Brazil) 116 and 040, suspended due to technical errors, are being redone.
In the railway transport industry, Mr. Figueiredo said that part of the 10,000 km of railways expected to be privatized that were included in the integrated logistics package announced by the federal government last year, may be auctioned only in 2014. “We want to publish the rules and hold the auctions this year, but something could be left for next year,” he said.
He recalled that the first 2,600 km of railroads, of which the rules were expected for March, are still awaiting the conclusion of studies. Part of that group involves the north and south stretches of the São Paulo Ferroanel, a set of tracks circling the metropolis, and the access to the Port of Santos (São Paulo), the Lucas do Rio Verde (Mato Grosso) to Uruaçu stretch, as well as the Estrela d’Oeste (São Paulo)-Panorama (São Paulo)-Maracaju (Mato Grosso do Sul), Açailândia (Maranhão)-Vila do Conde (Pará) railroads.
Meanwhile, the second group of concessions, totaling 7,400 km, is still undergoing the public hearing process. “Projects are moving, but we're reviewing the schedules, since the rules for those tenders were supposed to be announced this May,” he says.
The delay apparently cannot be attributed to a lack of funds. People in two financing banks – the Brazilian Development Bank (BNDES) and the Inter-American Development Bank (IDB) – said they have been increasing lending activity to logistics businesses.
Last year, 30% of BNDES loans were destined to projects linked to logistics, according to BNDES director Roberto Machado. In 2008, that amount of credit represented 12%. Mr. Machado notes that financing trend in logistics projects is for the bank to increase available credit in the next few years.
Another event participant, IDB infrastructure and environmental manager Alexandre Rosa, said that 50% of the bank's loans go to infrastructure-linked projects. The share of bank money destined to the sector points to the main drivers of growth in the Brazilian and Latin American economies, he says.
Mr. Rosa also said Latin American investment in infrastructure needs to and will catch up in the next few decades. “We have made studies and found that the region's countries, including Brazil, invest around 3% of GDP in infrastructure. To compete with South Korea, for instance, the rate would have to be 5%. With China, the rate would have to be 7%,” he said.
According to the IDB's evaluation, four main factors led to the incipient investment rate of the region in the last two decades: The lack of an integrated vision for transportation, absence of public planning, scarce private projects and a legislation that inhibited sector investments. Mr. Rosa said infrastructure is going to be the main engine of Brazilian growth in the next few years. “As well as the rise of the class C, social inclusion and growing consumer spending were responsible for the country's growth in the last ten years, infrastructure investment will now take on that role,” he said.
EPL's Mr. Figueiredo also said that São Paulo's Ferroanel is another project that may only be offered to private interests next year. “It's better if you can actually do a study. We started the licensing process and delayed the concession. Ferroanel is one of the projects in which that may happen, but it's not the only one,” he said.
When the logistics package was announced by the federal government in August, then Transportation Minister Paulo Passos had said that the goal was the Ferroanel project to leave the drawing board by July. The new projection is for the tender rules to be announced in July and the auction to take place in October, but the government studies may delay the concession even more. 
Mr. Figueiredo noted that the federal government will sign an agreement in the next few days with the São Paulo government, so that the construction in the north stretch of the Ferroanel can take place at the same time as work for the Rodoanel, a ring road for São Paulo, with a parallel lane that would take advantage of some eminent domain and environmental licensing work.
The EPL president also said that the government must negotiate with MRS and ALL, the private-sector companies that managed the railway to the Port of Santos, to invest in links to the seaport and take control of them. Asked if he believes that the companies will let go of those stretches, Mr. Figueiredo said it would depend on the compensation.  “If you improve traffic conditions, it could become better for the companies than to operate alone under the current conditions,” he says.


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