Brazil touts sweeping infrastructure campaign

OREANDA-NEWS. June 11, 2015. Brazil is seeking to attract R198.4bn (\\$63.9bn) in investments through 2019 in a multifaceted infrastructure concession program covering new highways, railways, ports and airports.

The government campaign is part of a wider effort to jump-start the foundering economy.

Just over a third of the investment should be generated through tenders planned through 2018, with the remaining two-thirds expected from 2019 tenders.

The government says state-backed development bank BNDES will have a more limited financing role in the infrastructure projects than in the past, leaving greater scope for the private sector to fund projects through infrastructure bonds.

New highway projects are expected to attract R66.1bn through 2019. The government will launch the auction of five interstate projects covering 2,603km (1,617mi) this year, and another 11 covering 4,371km in 2016.

"There is a demand for better roads in Brazil. So all these investments have great demand," finance minister Joaquim Levy said.

Auctions of seaport concessions will attract R37.4bn investment, of which around R12bn will come from the private-sector lease of public-sector terminals.

The auction of nine terminals at Santos port and 20 terminals in the northern port of Para will take place this year and should attract total investment of around R4.7bn, the government says.

A second block including 21 terminal leases in Paranagu?, Itaqui, Santana, Manaus, Suape, S?o Sebasti?o, S?o Francisco do Sul, Aratu, Santos and Rio de Janeiro should happen in the first half of 2016. Total planned investment is R7.2bn.

The ports auction was originally announced in 2013, but was held up by Brazil's spending watchdog TCU.

Investment in five new railway projects is expected to top R86bn. Around R40bn of that amount is earmarked for Brazil's portion of a 5,500km railway that would link Brazil's Atlantic coast with the Pacific in Peru.

The project is supported by China, which is interested in bypassing the Panama Canal for iron ore shipments from Brazil. Last month, China offered around \\$53bn in total funding to Brazil during Chinese Premier Li Keqiang's visit to Brasilia.

The three countries plan to conclude feasibility studies on the project in the second quarter of 2016.

Last night, Brazil's federal comptroller GCU said that 29 contractors currently under investigation for their alleged role in a massive kickback scandal involving Brazil's state-controlled Petrobras would not be blocked from participating in infrastructure auctions, even though they remain banned from new Petrobras projects.

"Technically there is no impediment for companies to participate in bidding. Only after completion of the accountability process and punishment would they be blocked from participating," CGU minister Valdir Sim?o said.