Future Infrastructure Investment Plan
Brazil’s Plan for Infrastructure 2015-2019
November 15, 2015
Raajveer Puri – Primary Article Contributor
Tom Jones – Team Leader and Editor
Keywords: Brazil, infrastructure economy, development, Rousseff, Joaquim Levy, roads, railway, shipping ports, airports
Brazil is currently going through a financial crisis. The Brazilian Real is at an all-time low in the last ten years and its value has decreased to half of what it was 5 years ago. In an attempt to kick-start the economy, Dilma Rousseff has presented a new infrastructure plan valued at $64 billion that will improve railways, roads, ports, and airports across the country.
From 2000-2014, the production of grains had doubled but lack of infrastructure did not facilitate swiftness of transportation from the interiors of Brazil to the ports where they could be exported. This meant increases in grain production had to be halted until further infrastructure development. The total number of airport passengers also increased by a factor of 2.5 and the number of vehicles on the road tripled. These increases in the usage of transportation systems show us that there is a demand for this infrastructure project and there is great opportunity for investment.
Under the plan, the R$200 billion will be split up between roads, railways, shipping ports, and airports. R$66 billion will be allocated to building roads to facilitate better transport from interior soy and grain producers to ports. The majority of these roads will connect the interiors to the northern ports because they are more accessible than the overcrowded southeastern ports. R$86 billion will go into railway systems within Brazil. Also part of the plan is the ‘bi-oceanic railway,’ which costs $40bn and its purpose is to build a railway connecting Brazil to the Pacific Ocean through Peru. As for shipping ports, many of the approved concessions are already in construction, making the R$37 billion dealt to ports look like a positive investment. Finally, R$9 billion will be assigned to the airports in Salvador, Florianopolis, Fortaleza, and Porto Alegre.
A similar infrastructure plan was announced in 2012 as well, however it was not a complete success. The airports in the 2012 concession were considered a success and out of the proposed 14 roadway concessions, only 6 contracts were ratified. The 2012 plan was faced with a combination of extended delays in the auction process and a clumsy bureaucratic system, resulting in a half-fulfilled infrastructure plan. This time around, there is a laid out plan and investments are scheduled from 2015-2019. 5 out of the 16 proposed roadway concessions are going to take place before 2015 ends, which will cover 4400 km. Furthermore, all projects under the plan will start no later than 2018.
