Works in hangover

The high cost of stopped or delayed projects may be measured through level of unemployment, decrease of economic activities, losses of public coffers and ‘bad mood’ of businessmen

Brazil is currently an immense worksite of projects that are stopped, cancelled, postponed or maintained in a slow pace. This is due to the unfavorable politic and economic environment: reduction of GDP and income, cuts in the budget, increasing unemployment, bureaucracy, environmental licenses or effects of Operation Lava-jato. Delay of government payments for works already finished or lack of resources to continue the project are the most-heard complaints of companies of almost all areas.

There are too many investments waiting for conclusion, from infrastructure investments—fundamental for country’s development—to small rural roads in the extremes of the country. The Confederação Nacional das Indústrias (CNI – National Confederation of Industries) disclosed last year the study Infrastructure – the cost of delays and the needed reforms, where the high waste of resources caused by delay in the projects is clearly shown. In just six of them, the estimated cost of their delay was above R$ 28 billion till 2013. We may say that the delay of these six projects would be enough to build 466 thousand popular homes. The survey included the Airport of Vitória, the sanitation sewage Project of the Cocó basin, in Fortaleza, the transposition project of the São Francisco River, the West-East integration railway and the power transmission lines interconnecting the hydroelectric plants of Madeira River to the national integrated network.

According to the document, the delays have recurrent causes: poor quality of basic design, used to develop the budget and to bid the project; delay to obtain environmental licenses and to carry out expropriations; poor management of the projects when the works are being carried out, with overestimation of benefits and underestimation of deadlines and costs; lack of technical qualification and experience of the teams who design, develop and follow up the projects; political decisions in detriment of technical criteria, what leads to bad establishment of priorities and milestones. The CNI ended the survey with a series of recommendations to the public contracting organs and to the government.

Survey

Main stopped projects that may alert the government and the civil society about the high economic and social cost of this situation, by far the worst problem to be continued in the next year, are detailed as follows.

One of the worst examples is the Petrochemical Complex of Rio de Janeiro (Comperj) that was designed in 2005 with a cost of US$ 3 billion and that has no forecast for its end, although consuming investments that totalize U$$ 13 billion. Works would be concluded in 2011, occupying an area of 45 sq.km with two refining plants, one processing plant of natural gas and one petrochemical plant of last generation.

The Abreu e Lima refining plant, in the state of Pernambuco had a forecast of R$ 4 billion and would be started in 2009. Half of the total cost would be invested by the government of Venezuela. Current costs will be above US$ 20 billion and this is the most expensive project being carried out in the country.

Still in the area of refining plants, we have also the cancellation of the works of Premium 1 Plant, in Bacabeira, state of Maranhão, after receiving investments of almost R$ 2 billion from Petrobrás between 2007 and 2014. The foundation stone was launched in 2010 and the expectation was to invest R$ 30 billion in units Premium 1 and Premium 2, in the state of Ceará. The project was cancelled in February of this year.

PROJECT START COST OF DELAY/2013

- Airport of Vitória 2004 R$ 179,5 million

- Sanitation in the Cocó Basin (CE) 2008 R$ 59, 0 million

- Transposition of S.Francisco River 2005 R$ 16,7 billion

- Railway (FIOL) 2010. R$ 9,2 billion

- BR-101 road - Santa Catarina 2002 R$342 to R$684 million

- Power transm. lines of Madeira 2008 R$ 1,6 billion