The infrastructure plans of Brazil's Minas Gerais state

Brazil’s Minas Gerais state is accelerating its PPP and concessions agenda to encourage infrastructure investments, as it is also expecting an influx of resources from the potential record compensation for the Mariana tailings dam tragedy.

The dam was operated by Vale-BHP JV Samarco Mineração and collapsed in 2015, killing 19 people.

Minas Gerais’ infrastructure and urban mobility secretary, Pedro Bruno Barros de Souza, talks with BNamericas about the plans and the agreement.

BNamericas: What are Minas Gerais’ infrastructure priorities?

Souza: Minas Gerais has one of the most successful [concession, PPP] partnership programs in the country. We have 19 partnership contracts in force.

In the highway segment specifically, there are six contracts in force involving more than 15bn reais [US$2.94bn] of investments, which are being made to improve conditions, providing greater safety and comfort to users.

Our future agenda is divided into three verticals.

One vertical is highways. We're planning to hold five more highway [concession] auctions until 2025.

We also have an urban mobility vertical, with a view to relieving traffic and improving mobility in Greater Belo Horizonte.

Finally, we have another frontier, which is social infrastructure and involves projects in the areas of health, education, public security, as well as an environmental agenda, which refers to park concessions.

These initiatives will keep our state at the forefront of partnerships in the country.

BNamericas: How much investments do you expect for these projects?

Souza: In these 19 contracts I mentioned, in the most diverse areas, not just highways, there's a projected investment volume of 23bn reais. These are investments that are contracted.

Regarding the new portfolio, with new projects that we will offer, we will add investments of 20bn reais. These are contracts that will go up for auction starting this year and will extend over the next few years.

We're talking about a general package of almost 40bn reais of investments in the state, which will continue to boost the infrastructure of Minas Gerais, as investments are required due to the size of the state.

Our vision is to defend the complementarity of public investments and private investments through partnerships.

BNamericas: What are the urban mobility initiatives?

Souza: Currently, we have two large projects for which contracts were signed a year ago.

The first is the Belo Horizonte metro concession, a 5bn-real contract for the expansion of line No. 1 and construction of line No. 2.

Furthermore, we have the Belo Horizonte beltway, which is a greenfield project, covering 70km and over 5bn reais of investments. This is also a project that will transform urban mobility in Belo Horizonte.

In addition, we have the concession of the highway and metropolitan terminals granted and in the implementation phase.

We also want to renew the public transport fleet and this is part of a discussion to decarbonize [it]. This is a broader debate on sustainability. We're in the modeling phase of this fleet renewal.

BNamericas: What’s the state’s infrastructure budget this year?

Souza: In 2023, [road department] DER-MG invested 1.5bn reais in road repairs. For comparison, in the previous 10 years, the annual average was 300mn reais.

In addition, we had another 1.5bn reais invested by private sector companies that have ongoing concession contracts, so we're talking about an investment of around 3bn reais to improve highways just last year.

This year, we plan to increase these investments.

DER’s budget this year is just over 2bn reais for road repairs and a similar amount will be invested by private companies through concession contracts in operation.

This investment will help improve our road network, which is the largest road network in the country.

BNamericas: How will you use the compensations mining companies are expected to pay for the Samarco tailings dam collapse?

Souza: It's clear that Minas Gerais is going through a [difficult] fiscal situation; we have been talking to the federal government about the state's debt.

But even in this difficult scenario, the governor [Romeu Zema] has been a great supporter of increasing investments in infrastructure, through the initiatives I mentioned.

The agreement related to Mariana, once it's published, should bring us another increase in resources to move forward. We have a list of projects ready to direct resources to as soon as the agreement is signed. We're optimistic about the completion of this agreement.