The country of “regrettable” infrastructure is looking for financing and good projects

To recover national infrastructure, Brazil will have to more than double the volume of investments in the area, going from current 2.1 percent of the GDP (approximately R$ 130 billion) to 5.0 percent of the GDP (approximately R$ 300 billion)per year

The situation of Brazilian infrastructure is “regrettable” and the country will suffer hard consequences due tothe lack of investments in the area, such as loss of competitiveness in the global market and delays in its process of development. This evaluation comes from the infrastructure director of the World Bank, Paulo Procee, when commenting a study carried out by the institution, which considers a scenario until2020. There are several reasons, but the bank lists as main causes the lack of planning, the lack of financing by private local institutions and mainly bad-developed projects.

ForProcee, corruption is an additional obstacle for the development of Brazilian infrastructure.He believes that the closed market fosters the culture of corruption through the creation of cartels. To have an idea of the harmful effects of the cartels on the industry, it is enough to remember that 32 companies with strong action in the area of infrastructure are currently involved with lawsuits in the Federal Justice, resulting from “Operação LavaJato”. They correspond to 14 percent of the GDP, a volume ofR$ 760 billion in transactions.

In addition to this situation, bureaucracy always jams the administration with hundreds of rules that make difficult the participation of new players such as medium-size contractors and international engineering companies.

The Brazilian economic crisis reduced even more the capacity of financing new projects and stopped projects that were being carried out. According to theAssociaçãoBrasileira da Infraestrutura e Indústrias de Base (Abdib),investments in infrastructure reached 2.1 percent of the GDP in 2015, including public and private resources in the four main areas (power, transports, communications and sanitation).For 2016, data collected by the entity with investors and public agents points to a new reduction in the total volume of investments, which will reach the lowest level of infrastructure incomesince 2009.

Still according toAbdib, between 2014 and 2015, investments were reduced in 17 percent—in steady numbers—in all areas of infrastructure. In the last two years, public income was much more reduced than private income.

In 2015, private participation has increased in the total investment of all areas: 55 percent intransports, 68 percent in power, 16 percent in oil and gas, 100 percent in telecommunications and 11percent in sanitation.

Projects included in the PPI

Transport

• Porto AlegreAirport

• SalvadorAirport

• FlorianópolisAirport

• FortalezaAirport

• Fuelterminalsof Santarém (STM 04 e 05)

• Wheatterminalsof Rio de Janeiro

• BR-364/365/GO/MG

• BR-101/116/290/386/RS

• EF-151 SP/MG/GO/TO

• EF-170 MT/PA