RIO DE JANEIRO, June 4 (IPS) – The health, financial, environmental and political crises have not stopped Brazil from attracting private capital to expand infrastructure, according to Sector Minister Tarcisio de Freitas.
The Minister of Infrastructure announced in a press conference held with about twenty foreign correspondents, in which other leaders in the fields of trade and transport participated, the concessions of airports, highways, railways and port stations, which were auctioned in the past two years, with a total investment of 14 billion dollars. Share too.
He predicted that accelerating this process from July will allow the country to raise the total investment to $200 billion over the next five years, if resources and services are included under the management of other ministries, such as power plants and sewage.
“It is the largest infrastructure franchise program in our history,” Freitas said in a June 2 video conference with foreign correspondents.
The COVID-19 pandemic has contributed to Brazil’s success in attracting international capital, contrary to what was expected.
Freitas said: “We advanced when many countries backed down and stopped offering their assets due to the uncertainty in the economic situation. We decided to bet on seeing long-term investors and looking for the excess capital available in the world, as premium sellers.”
The operation of 22 airports was privatized on April 7 for an amount equal to 17 times the minimum set price, despite the air transport crisis caused by the pandemic. A French company acquired a 30-year concession for a group of seven airports in northern Brazil. The others are now in the hands of a Brazilian consortium.
At the virtual press conference, which was promoted by IPS in partnership with the UK government, the minister said the success was due to Brazil’s “tradition of honoring contracts”, the large portfolio of projects and their excellent profitability. Foreign Media Correspondents Association, The National Trade Federation and the Federation of Foreign Chambers of Commerce.
The Infrastructure Minister said attracting national and international private capital is the way to cover Brazil’s infrastructure deficit, given the “delicate financial situation” that limits public investment.
“The Ministry of Transport had 20 billion riyals (about $7.5 billion at the time) for investments in 2014 when it was only responsible for land transportation, and today the Ministry of Infrastructure has six billion riyals ($1.2 billion) and it oversees ports, airports, roads and railways. Pointing to the need for private capital.
Jose Tadros, president of the National Trade Federation, said that Brazil invested 2.2 percent of its GDP in infrastructure from 2001 to 2014 and “should invest four to five percent to overcome its historical shortcomings”.
This is far less than what neighboring countries like Chile and Peru are investing in infrastructure, and the result is higher costs, “bad roads and ports, and a lack of rail and intermodal connections,” he lamented.
This is a “virtuous moment” in the rail sector, said Fernando Paes, CEO of Rail, with a strong increase in investments expected following the renewal of existing concessions and future construction of two new major lines. National Rail Transport Agency.
The Ministry of Infrastructure National Logistics Plan sets a goal for railways to transport 36 percent of national freight by 2035, an increase of 70 percent from the current quota.
Virugrao (part of the plan) is “the most important project in Brazil,” according to Freitas. The 933-kilometre route will mainly serve the export of soybeans and corn from the north-central state of Mato Grosso, the country’s largest producer of these exports, which account for 27 percent of the total. The northern Amazon route will be used in place of the far southern ports.
The exports are currently transported via the BR-163, which was only completed in February 2020, decades after trucks laden with soybeans got stuck in mud while crossing more than 900 kilometers of the Amazon rainforest to reach Meritatuba port in the Tapajós River, before transporting Soybeans for 1,100 km downriver to Atlantic ports.
The railways serve the interests of the multinational corporations that dominate these Brazilian exports and global agricultural trade, such as the American companies ADM, Bunge Limited and Cargill.
But Virugrao will make transporting these exports cheaper and help reduce shipping costs across the country, by expanding agricultural exports across northern Brazil and creating a logistics hub between the heart of the Amazon and central Brazil, the infrastructure minister hopes.
He predicted that products from the Manaus Free Trade Zone, an industrial zone in the state capital of Amazonas, would reach key national markets via waterways and railways.
He also said that its construction will have beneficial environmental impacts by reducing greenhouse gas emissions by trucks and reducing more intense deforestation caused by roads.
But environmentalists and indigenous rights advocates differ.
It will stimulate the expansion of agricultural frontiers in the Amazon rainforest, where there is a lack of management, leading to deforestation,” said Sergio Guimarães, executive secretary of the Amazon Rainforest. Infrastructure working group, in an interview with IPS over the phone from Brasilia after the press conference.
He pointed out that the environmental assessment does not include the indirect effects of the project on a wider area of the railway line and its margins. Cheaper transportation on a large scale tends to expand production space in an area already affected by massive monoculture on the fringes of the Amazon rainforest.
In addition, the activist said more supply and demand studies and comparative analyzes of alternatives are needed.
Three railway projects have been introduced to transport soybean and corn exports from central north of Mato Grosso, which are currently 70 million tons per year and will rise to 120 million tons in the near future, according to Freitas.
In addition to Ferrogrão, an isolated line to the north, the Central and Western Integration Railway (Fico) will run from the east, linking to the North and South Railway which is already operating and has access to ports in the northeast and southeast of Brazil.
A third alternative is a proposal by Rumo to extend its northern network, now south of Mato Grosso, to the center of the soybean production area. This network has the advantage of rail connectivity with access to Santos, Brazil’s main export port, and transit of São Paulo, the most economically productive and populous state.
But Guimarães, who is calling for comparative studies on projects and other concessions of the Infrastructure Ministry’s logistics plan, said: “There are not enough shipments to make the three railways viable.”
Other risks identified by Guimarães with respect to Virugrao are the potential for overloading and accidents on the Tapajós-Amazonas waterway, if most of Mato Grosso’s production is exported via this route, and changes in river flows due to climate change.
Another railway, the Western and Eastern Integration Line (Fiol), which crosses the northeastern state of Bahia and runs for 537 kilometers granted to a mining company controlled by the Kazakh Eurasian Resources Group, also faces environmental opposition to the threat to local biodiversity, particularly in the area where the port is to be built. In which.
The minister announced that the ports, which have been the “bottleneck” of exports, are also undergoing improvements and large-scale privatization.
Waterways, an undervalued resource in Brazil, have also been included in the transformations his ministry intends to make. But this is where you feel the effects of climate change most yet with severe droughts in the Midwest and Southeast of Brazil. Navigation is expected to be suspended on the Tieti River, which crosses the state of São Paulo in southeastern Brazil.
© Inter Press Service (2021) – All rights reservedOriginal source: Inter Press Service