Spotlight: Brazilian infrastructure developments in August

August looks to be a packed infrastructure month in Brazil, as a major government program will be presented and various tenders take place.

The Luiz Inácio Lula da Silva administration will announce its PAC infrastructure program.

"The new PAC will be launched on August 11 and includes a series of investments in the social, logistics and infrastructure areas with a great impact on job and income generation and reduction of production costs in Brazil," chief-of-staff Rui Costa tweeted.

The program could trigger investments worth 60bn reais (US$12.7bn) per year, a government official told BNamericas, requesting anonymity.

But sector players are cautious. "We've had other PACs in the past with poor performance and effective implementation of the announced projects much lower than what was promised. Of course, there is always a positive expectation surrounding details of such major programs, but we need to better understand what model will be adopted to make projects feasible," Luis Baldez, president of cargo transport association Anut, told BNamericas.

“The fact is that history shows that these programs announced by governments fall short of the expectations generated,” he added.

"The most important thing for Brazil is to have institutional and legal stability so that projects can move forward, even if the future economic scenario is challenging," João Cortez, a partner at infrastructure advisory Vallya, told BNamericas.

A PAC was implemented during Lula’s previous terms (2003-11), with a strong public investment focus. But the upcoming version is expected to focus on concessions and PPPs for social infrastructure, such as schools and hospitals, and solid waste and energy efficiency.

PPPs, CONCESSIONS

In parallel, several PPP and concession auctions will take place at São Paulo's B3 stock exchange.

A 30-year concession for the first lot of Paraná state highways will be offered on August 25, comprising roadworks on 473km and investments of 13.1bn reais. The contract will go to the bidder offering the lowest toll.

Six lots comprising 3,300 km are planned to be auctioned. The roads connect Paranaguá port, Curitiba city, 29 municipalities, the state’s west and north, and the Amizade bridge on the border with Paraguay. The package is among the biggest on offer and involves new lanes, bridges and other works.

"The trend is that highway auctions in Paraná attract the interest of highway companies and investment funds established in Brazil. These projects are so large and involve such a great need for inputs that it is unlikely that a new entrant will assume these contracts with the huge work of mapping all local suppliers, as the lack of inputs has been a major problem in recent years," said Cortez. 

Meanwhile, the government will auction leasing contracts for six port terminals on August 11.

The main contract, involving 910mn reais, relates to solid vegetable bulk terminal PAR09 at Paranaguá port in Paraná state.

The other tenders are expected to generate combined investments of 125mn reais. Three terminals are in Maceió port, Alagoas state, one in Porto Alegre, Rio Grande do Sul, and one in Ceará’s Fortaleza.

Leasing port terminals is widely used to attract private investment.

HOSPITAL PPP

On August 2, Rio de Janeiro city will offer an 850mn-real PPP for the management for Souza Aguiar hospital. The 30-year contract also covers the Centro emergency center and the Maria Amélia Buarque de Hollanda maternity hospital.

The winner must invest in equipment renewal and facility modernization.