Brazil to privatize more airports and grain handling railways

According to the head of the Brazilian government’s PPI (Investment Partnership Program), aimed at attracting private investment into infrastructre, in the second quarter, privatization of airports in the South, including Curitiba, will be announced.  It was also announced that the Ferrogrão and FIOL railway projects, focused on transporting grain, would be ready for bidding either this year or early next year.

Government plans include reducing Brazil’s heavy reliance on road transport for getting cargo to ports by building more railways and getting current operators to invest in expansions as their concessions come up for renewal. By 2025, it hopes to double the share of cargo moved by rail from 15% to 31%.  The Ferrogrão railway will take 10 years to build, and will run from Sinop in Mato Grosso state to Miritituba on the Tapajós river, from where barges will carry crops for transshipment on the Amazon and out to world markets.  The FICO and FIOL railways will connect the farm belt to the North-South line and Atlantic ports, with a capacity to handle 8m tons of grains per year.

Moreover, control of Brazil’s largest electricity provider, Eletrobras, will be privatized after separating two strategic subsidiaries – nuclear power generation unit Eletronuclear and the Itaipú Binacional, a hydroelectric power plant which straddles the Brazil-Paraguay border.

 

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Brazil to privatize more airports, railways for grains

BRASILIA (Reuters) – Brazil’s government will announce the privatization of southern airports, including Curitiba, in the second quarter of this year, according to Adalberto Vasconcelos, head of the PPI government program tasked with luring private investment in the country’s infrastructure.

Secretary for Investment Partnerships Program Adalberto Santos de Vasconcelos poses for a picture after an interview for Reuters in Brasilia, Brazil January 21, 2019. REUTERS/Adriano Machado
Vasconcelos told Reuters on Monday that the Ferrograo and FIOL railway projects serving the central grain belt would be ready for bidding this year or early in 2020. Miner Vale S.A. and logistics company Rumo S.A. are also expected to sign early renewal of rail concessions this year, involving a commitment to new investments, he said.

Chinese investment would be “very well received” in Brazilian infrastructure projects, Vasconcelos said.

Brazil’s new right-wing President Jair Bolsonaro criticized China for “buying up” Brazil during the election campaign last year. But Vasconcelos clarified that he was referring to strategic assets and “means of production” such as farm land.

Bolsonaro, who took office three weeks ago, is boosting the Investment Partnerships Program started in 2016 by the previous government to speed up improvements in deficient infrastructure that adds to the cost of exporting Brazilian soy and other food.

To improve air travel across the vast country for tourism, farming and the oil industry, 20 airports will be auctioned on March 15 as planned in three regional blocs.

Vasconcelos said one or two more blocs of airport concessions will be announced after March, including Curitiba, but not the coveted busy airport of Congonhas in Sao Paulo and Santos Dumont in Rio de Janeiro. These will not be on the auction block for now because they are key to funding Infraero, the government agency that manages airports.

The government plans to reduce Brazil’s heavy reliance on road transport for moving cargo to markets and ports by building more railways and getting current operators to invests in expansions as they sign renewal of their concessions.

By 2025, it hopes to double the share of cargo moved by rail to 31 percent from 15 percent, Vasconcelos said.

Vale, the world’s second largest mining company and top iron ore exporter, and Rumo have already agreed and their contracts only need approval by the federal audits court TCU, he said.

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The Ferrograo grain railway will take 10 years to build, he said, and run from Sinop in Mato Grosso state to Miritituba on the Tapajós river from where barges will carry crops for transshipment on the Amazon and out to world markets.

The FICO and FIOL railways will connect the farm belt to the North-South line and Atlantic ports, with a capacity to move out 8 million tonnes of grains a year.

Control of Brazil’s largest utility Eletrobras will pass into the hands of private investors via a huge new share sale under a previously announced model, after separating two strategic subsidiaries, nuclear power generation unit Eletronuclear and the massive Itaipú Binacional, which straddles the Brazil-Paraguay border.

The PPI program run by Vasconcelos will be responsible for handling concessions and privatizations of state companies, though the sale of their assets or subsidiaries will be handled by the divestment office at the Ministry of Economy.

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Brazil seeks to privatize, pave Trans-Amazonian Highway

BRASILIA, Jan 22 (Reuters) – Brazil will add the Trans-Amazonian Highway to the list of projects for privatization, its infrastructure minister said on Tuesday, seeking new investment to pave parts of a dictatorship-era roadway already blamed for extensive deforestation.

The government also plans to sell to investors a concession to run BR-163, a key northern route for shipping Brazilian grains, adding it along with the Trans-Amazonian to a priority list for privatization at a meeting next month, Infrastructure Minister Tarcisio Freitas told Reuters in an interview.

President Jair Bolsonaro’s government is seeking to overhaul Brazil’s poor transportation infrastructure, which raises costs and causes delays for the commodity-exporting powerhouse, by seeking private investors to operate dozens of road, rail and airport projects.

On Monday, government Secretary Adalberto Vasconcelos, who has been tasked with creating public-private infrastructure partnerships, said the country would privatize more airports and secure new investment for railways.

For roadways, five concessions are slated for auction this year with a long pipeline of projects to follow, according to Freitas. BR-262/381 in the state of Minas Gerais, sometimes called the “Road of Death” because its poor condition has contributed to lethal accidents, will also be put on the privatization list next month, he said.

The Trans-Amazonian highway, officially known as BR-230, was inaugurated in the 1970s under Brazil’s military dictatorship, but only a fraction of its nearly 3,000 kilometers (1,864-miles) were paved and much of the existing roadway has fallen into disrepair. It stretches from the coastal state of Paraiba deep into Amazonas state. Original plans for it to reach the border with Peru were never completed.

Nevertheless, research by Brazil’s space agency and academics has linked the road to a rise in deforestation, and road improvements allowing easier access deep into the Amazon have consistently led to increased deforestation nearby.

Freitas did not elaborate on whether the country would seek to privatize all or part of the Trans-Amazonian.

He said that major construction firms that were implicated in corruption schemes remain unable to participate in public auctions for infrastructure projects, but could act as subcontractors for winners of concession auctions.

Engineering conglomerates implicated in corruption schemes to fix contracts include Odebrecht SA and Andrade Gutierrez SA, with those companies signing leniency deals with the government admitting guilt and agreeing to cooperate.

“They are companies that have know-how, companies with engineering (ability), companies that can provide good services,” Freitas said.

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