Spotlight: The infra agendas of 3 Brazilian states

The governments of Brazil’s three wealthiest and most populous states are pressing ahead with infrastructure projects that will generate investments of 66bn reais (US$12.4bn).

The state of São Paulo has an infrastructure plan worth 47.5bn reais, followed by Minas Gerais state with plans to invest 11bn and Rio de Janeiro with a plan of 7.5bn. 

"The efforts of the governments to announce these investments is related to the electoral calendar in Brazil and the political intentions of each of the governors of these states," João Pedro Cortez, an infrastructure specialist at financial advisory firm Vallya, told BNamericas. 

Brazilians go to the polls in October 2022 to vote for president, lawmakers, and state governors. 

"Many of the public works contracts announced right now will be signed in the coming months because many contracts cannot be signed in the months just before the elections," Letícia Queiroz, an infrastructure-focused lawyer and partner at law firm Queiroz e Maluf, told BNamericas. 

"What is interesting to know is that in Brazil today no government is against PPPs and concessions. Everyone is convinced that infrastructure is highly necessary and since there is no fiscal room in the public sector, everyone is looking towards concessions, whether right-wing or left-wing governments," said Queiroz.

The investments

Last week the São Paulo authorities unveiled an investment program worth 47.5bn reais called Pró SP, which will be in place until 2022 and could increase support for governor João Doria, who is planning to run in next year’s presidential election. 

Pró SP includes public sector investments and 11 concessions and PPP projects. The biggest investment will be resuming construction of the subway’s line No. 6, with an estimated 15bn reais.

The program also entails construction of subway lines and repaving of various highways. 

In Minas Gerais, where governor Romeu Zema is seeking reelection next year, the government is investing 11bn reais in infrastructure projects. 

The investments are part of a compensation deal totaling 37.7bn reais that was signed by the state with Brazilian mining giant Vale, in relation to the Brumadinho tailings dam disaster in 2019. 

Among the main projects are the construction of a beltway, which will bypass the metropolitan region of Belo Horizonte and link federal highways BR-040, BR-381 and BR-262. It has an estimated capex of 3.5bn reais. 

The state authorities are also planning to extend the Belo Horizonte subway.

After some years of drastic tax revenue reduction due to oil industry woes, Rio de Janeiro is funding a major infrastructure push with cash raised from a successful auction of the state’s sanitation services.

The state government recently unveiled a three-year infrastructure program with investments worth 7.4bn reais.

"Rio de Janeiro’s economy started to grow again. With that, we are now in good shape to present a package of infrastructure investments and we want the major part of the works in this package implemented by March of next year," Max Lemos, the state’s infrastructure secretary, told BNamericas in a recent interview. 

The investments will go to building a 23km bus rapid transit lane in the Baixada Fluminense area, the recovery of 882km of roads, the construction of at least 5,000 housing units, and school building improvements, among other projects.

The program’s funding is coming from the sale of state utility Cedae’s sanitation services to the private sector.

The April auction generated 22bn reais in fees for the state government, more than double the initial expectation.

One of the four lots did not attract bids but a new auction for this lot is expected to generate 3bn reais in fees, as the concession area has been increased from seven to around 20 municipalities. The auction is slated to be held at the end of this year.