Brazil Launches Massive Infrastructure Plan

Port of Santos

By Reuters 06-09-2015 12:08:43

President Dilma Rousseff of Brazil unveiled a concession program on Tuesday to draw 198.4 billion reais ($64 billion) in private investment over five years to upgrade and operate Brazilian roads, railways, airports and harbor terminals.

The logistics plan includes 4,371 kilometers of new highways, the extension of existing railway concessions and the private operation of airports in the cities of Porto Alegre, Fortaleza, Salvador and Florianopolis, according to a government presentation.

The new concessions will have access to less state bank financing in the midst of Brazil's current drive to cut spending and reduce a bulging fiscal deficit. Bidders will be expected to partially fund projects with private financing.

The plan is meant to restore growth in Brazil's faltering economy and boost Rousseff's popularity which has been battered by high inflation and a corruption scandal at state-run oil company Petrobras.

The government expects 66.1 billion reais in investments in highways, 86.4 billion in railways, 37.4 billion in ports and 8.5 billion in airports. Auctions for the airport concessions will start in the first quarter of 2016.

Brazil will open 29 state-owned port terminals to private operators in Santos, the country's largest port, and in the state of Para, and a second round of auctions will include terminals at Paranagua, Itaqui and other ports.

Brazilian development bank BNDES will continue to have a "relevant" role in financing infrastructure building, the government said, particularly railway projects that can be funded up to 90 percent by state bank BNDES.

Road concessions will have a maximum access to the BNDES' low interest rate of up to 40 percent of the project cost as long as they raise at least 10 percent through the issue of infrastructure bonds.