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Brazil’s infrastructure minister has predicted a boom in the development of the nation’s highways, railways and airports with $ 50 billion investment in concession projects by the end of next year.
“Brazil will become a huge construction site,” Tarcísio Gomes de Freitas told the Financial Times.
“With the planned concessions, by the end of 2022, $ 50 billion will have been contracted in investments for the modernization of airports, ports, highways and railways. In other words, the equivalent of more than 30 years of the public budget for infrastructure, ”he said.
Investments will be a rare bright spot for Brazilian economy, which even before the pandemic had for years been affected by anemic growth, which increased the level of debt and rising unemployment. The largest nation in Latin America is also affected by weak infrastructure, especially poor quality roads that increase transportation costs, as well as the lack of basic sanitation services for millions of poorer Brazilians.
The success of the concession model – in which companies and investors are committed to investing and operating in long-term projects – will also boost the government’s liberal economic agenda and finance minister Paulo Guedes, who has tried to reduce the role of the bewildering state.
Last month, in a marathon week of auctions, investors invested nearly $ 10 billion in several projects, including 22 airports, five ports, a rail line connecting the country’s east coast with the western agricultural interior and several works by road. French airport group Vinci won seven of the 22 airports, and Brazilian companies took the remaining concessions.
By the end of next year, the government plans to auction concessions for 100 assets.
For Freitas, as well as for independent analysts, much of the success of the auctions was due to the improved regulatory environment in Brazil and the growing confidence in legal frameworks.
“Brazil is well positioned to continue attracting international investors. The country is taking the right measures to attract them: structuring good projects, publishing notices in advance in foreign languages, increasing the level of legal certainty of projects and arbitration clauses in contracts, “said Rafael Vanzella, lawyer for ‘infrastructure of Machado Meyer Advogados.
“We have seen improvements and every day an additional step is taken in this direction. Brazil is reaching an important level of maturity.
De Freitas added that Brazil’s commitment to fiscal discipline – Minister Guedes’ call in recent years – had made investors more comfortable considering the country.
De Freitas, a trained army engineer who moved into the public service more than a decade ago, said Brazil was facing an “urgent task” of transforming its transportation matrix and untying it. se of highly polluting trucks.
“The railway segment today represents only 15% of the national logistics distribution, while road transport accounts for 65%. The government’s goal is to increase the share of the railway to 35% of the total cargo transported in 2035 ”he said, pointing to the government’s flagship project to build a railway to connect the large agricultural interior with the Amazon river arteries.
“It is estimated that the mere replacement of the road by the railway will reduce up to 1 million tonnes of CO2 from the Amazon sky a year.”
This approach to railway construction has made Freitas a popular figure in Brazil’s agricultural states and some have suggested he may have larger political aspirations, a suggestion he denies.
However, it is a target of anger among environmentalists, who say they have not been consulted on many of the infrastructure projects appearing across the country.
“The government speaks directly with the business sector, but does not maintain a dialogue with civil society,” said Tatiana Oliveira of the Institute for Socioeconomic Studies.
“There is a pattern of treating the environment as an obstacle to the country’s progress and development. The environment and communities have always been ignored. ”
Additional reports from Carolina Pulice
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