During a recent business seminar entitled “Opportunities in Infrastructure in Brazil”, held in New York city, Dilma Rousseff emphasised that infrastructure investments are the primary goal of the Brazilian government to allow the country’s growth.
Before the elections, Brazil had already counted investments reaching 90 billion Brazilian real (US$36.5 billion) to improve urban mobility, plus an expected BRL50 billion announced by the now re-elected President Dilma Rousseff. These resources are intended to meet and also strengthen the infrastructure needs of major Brazilian cities.
According to official data released by the Brazilian government, the nation’s ports are receiving approximately BRL7.5 billion in investments to expand and improve their infrastructure. It’s also important to mention that a further BRL328 million will be allocated to the sector after 2014.
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Port projects
Putting this into numbers on the ground, at least 24 ports are now the target of ventures, and many new projects will foster construction works and services agreements, expanding internal market opportunities.
Santos, Salvador, Recife, Rio de Janeiro, Manaus, Natal and Fortaleza – the base points used during the recent FIFA World Cup – are the cities where most of the efforts are being focused, at least until 2016.
Brazil’s energy sector has been beset with so many auctions, concessions and government plans, especially when it comes to “clean energy” projects.
In August of this year, wind power reached an installed energy capacity sufficient to sustain the needs of big cities in Brazil. As a matter of fact, wind energy has been drawing the attention of the federal government since 2009, and it is regarded as a very successful aspect of public policy.
When the Reserve Energy Auction (Leilão de Energia de Reserva in Portuguese, or LER) took place in October 2014, 1,034 projects were presented to the Energy Research Company (Empresa de Pesquisa Energética, or EPE), of which 626 were wind power projects – that is, more than half.
Solar energy projects
Now the federal government is aiming at solar energy projects, and the idea is to make this alternative clean energy source as successful as wind power.
Besides, auctions for transmission lines are occurring more and more often, which is a clear sign from the Brazilian government that the current administration is paying close attention to the energy sector.
As far as the nation’s railway system is concerned, the second Growth Acceleration Plan (Plano de Aceleração do Crescimento 2) has foreseen multibillion-real investments in the sector. Approximately 1,053 kilometres of railway line were built in Brazil from 2011 to 2014, and a further 2,545 kilometres of track are currently in progress.
The first stretch connecting Lucas do Rio Verde with Uruaçu is ready for construction at any time, since the bidding notice has already been approved by the Brazilian Federal Auditing Court.
Airports improved
Brazil’s airports are being improved as a consequence of more than BRL9.2 billion initially invested to develop this sector in the past few years, and as a result of the concession contracts signed by the federal government for major airports, such as those located in Rio de Janeiro, São Paulo, Brasília, Viracopos and Minas Gerais.
It is also important to bring a spotlight on the foreseen 270 regional airports that will be the subject of bidding procedures in the near future, with the aim of increasing the volume of passengers and cargo that can be transported between Brazil’s many cities. The concession model to be implemented will certainly ensure the return of investment from private partners.
When it comes to the nation’s highways, since 2012, during the first term of Dilma’s administration, it was foreseen that an extension of around 7,000 kilometres of roads would receive investment of at least BRL46 billion, out of which BRL18 billion had already been allocated via five projects that had developed more than 2,000 kilometres of road.
In the lucrative oil and gas sector, in 2013 the federal government carried out two major bidding rounds, with one being under the concession regimen and the other the first under a production-sharing agreement for the so-called “pre-salt” layer.
Dilma’s administration has been very active as far as huge infrastructure projects are concerned. During Dilma’s first term, Brazil has seen new bidding rounds for oil & gas – the first one being in the pre-salt layer under the production-sharing agreement – new airport concessions, highway concessions, the revamp of the legal framework applicable to ports, and the announcement of new railroad concessions.
This is a clear sign for investors, both national and international, that Brazil will keep looking to develop strategic areas of the economy, and the federal government will play a key role in this development.
Siqueira Castro – Advogados has been engaged by several international clients interested in those infrastructure projects, and many of them have proven to be very successful, and are considered to be great deals for our clients.
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Carlos Roberto Siqueira Castro is a senior partner at Siqueira Castro – Advogados in Rio de Janeiro. He can be contacted on +55 21 2223 8818 or by email at crsc@siqueiracastro.com.br
Fernando Villela de Andrade Vianna is a partner at Siqueira Castro – Advogados in Sao Paulo. He can be contacted on +55 11 3704 9840 or by email at fvillela@siqueiracastro.com.br
