Portfolio of projects predicts R $ 58.4 billion for highways Construction and Real Estate

Portfolio of projects predicts R $ 58.4 billion for highways

The federal government's infrastructure auctions program for 2019-2022 should stimulate investments of R $ 129.81 billion in transportation and logistics, according to data from the Ministry of Infrastructure. The project portfolio includes investments of R $ 58.44 billion in road works, R $ 8.5 billion in airport modernization, R $ 3.36 billion in ports, and R $ 59.51 billion in the expansion and modernization of the network railway.

Venilton Tadini, from Abdib: there is still a large gap between the proposed projects and the country's need
In the first hundred days of government, four of the auctions scheduled for the period were held. In March, the government raised R $ 2.37 billion, a premium of 986% over its estimated value, with the granting of 12 airports in Northeastern, Midwest and Southeast States. The new dealers committed themselves to a total investment of R $ 3.5 billion.

Rumo Logística paid R $ 2,719 billion to conclude the 1,537-kilometer stretch of the North-South Railroad between Porto Nacional in Tocantins and Estrela d'Oeste in São Paulo. It was the first rail auction since 2007. The company committed to invest R $ 2,724 billion in completing the necessary infrastructure to make the stretch operational. The concession is for 30 years.

In March and April two auctions of port terminals were carried out, generating R $ 667.4 million in grants. The first involved three areas in the port of Cabedelo, in Paraíba, which will require investments of R $ 71.5 million, and an area in the port of Vitória, in Espírito Santo, which is expected to receive improvements valued at R $ 128.2 million. In the second auction were granted six terminals in Pará that will stimulate investments of R $ 430 million.

The grant values ​​obtained in the first auctions exceeded the expectations of the government. "It shows that there is a lot of interest from investors in offering good projects in Brazil," says Natália Marcassa, secretary of development, planning and partnerships of the Ministry of Infrastructure.

Also in 2019, the government plans to auction six more port terminals, two in Paranaguá (PR) - one cellulose and another in vehicles - two in Santos (SP) - liquid bulk and fertilizers - and two in Suape (PE) - containers and vehicles. For the year, the government also intends to hold the first auction of a road stretch of the current concession program, the 437-kilometer route in BRs 364 and 365 between Jataí (GO) and Uberlândia (MG).

Natália Marcassa reports that the ministry team has held constant individual meetings with potential domestic and foreign investors and in the next two months the portfolio of infrastructure projects will be presented to stakeholders in Berlin, London and New York. The concessions program will be presented at six international forums during 2019.

"Brazil is very attractive to investors focused on long-term projects," says consultant Eduard Pujol, a partner at the Boston Consulting Group (BCG). According to Pujol, the country has a logistics infrastructure far below its need, which signals to stakeholders that there is unmet demand and that this scenario will accentuate when the country resumes its growth.

The consultant says that the low quality of the logistical projects offered to the market in recent years, together with regulatory insecurity, was affecting the interest in Brazilian logistics assets. "There is a significant change in the quality of the projects offered and the country has returned to investor radar," he says.

In Pujol's evaluation, the concession projects in Dilma Rousseff's government were conceived with rigid precepts regarding the evolution of demand and the necessary works in improvements and expansion of the infrastructure. "The reality of demand, however, invariably turned out differently than expected, forcing unpaid investments," says the consultant. "Now the investment schedule respects the real evolution of demand, which reduces the risk of the dealer."

Venilton Tadini, president of the Brazilian Association of Infrastructure and Base Industries (Abdib), says that the resumption of concessions is important to boost necessary investments in transportation, but there is still a large gap between the proposed projects and the country's need.

Abdib's study points out that the country requires annual investments equivalent to 2.26% of GDP over ten years to overcome the transportation infrastructure bottlenecks. In the best year of the last decade, 2014, the investment was 0.81% and the volume fell back to 0.5% in 2018. "The bottleneck in infrastructure is too big to be overcome only with private investments. It is necessary for the government to overcome its fiscal crisis and resume the capacity to invest, "says Tadini.