Brazil’s Infrastructure Minister Tarcísio de Freitas speaks with foreign correspondents during a video conference co-organized by IPS, in which he outlines plans to improve roads, ports and airports, build new railways and connect them with private investors in the face of domestic tax restrictions. CREDIT: Mario Osava / IPSRÃO DE JANEIRO, June 4th (IPS) – Health, tax, environmental and political crises have not prevented Brazil from attracting private capital to develop infrastructure, according to the Minister of the Sector, Tarcísio de Freitas.
The concessions for airports, highways, railways and port terminals auctioned in the past two years amount to a total of 14 billion dollars in investments, the infrastructure minister announced at a press conference with around twenty foreign correspondents, at which other top representatives from the areas of trade and transport also took part.
Accelerating that process from July onwards will allow the country to grow total investment to $ 200 billion over the next five years when resources and services are included under the management of other government departments like power plants and sanitation, he predicts.
“It is the largest infrastructure concession program in our history,” Freitas said in a video conference with foreign correspondents on June 2nd.
The COVID-19 pandemic, contrary to expectations, contributed to Brazil’s success in attracting international capital.
“We made progress when many countries withdrew and stopped offering their assets due to the uncertainties in the economy,” said Freitas. “We decided to focus on the long-term vision of investors and look for the excess capital available worldwide. as a unique seller. ”
The operations of 22 airports were privatized on April 7th for 17 times the set minimum price, despite the air traffic crisis caused by the pandemic. A French company has acquired the 30-year concession for a block of seven airports in northern Brazil. The others are now in the hands of a Brazilian consortium.
The minister said at the virtual press conference sponsored by IPS in collaboration with the Association of Foreign Media Correspondents, the National Trade Association, and the association, the success is due to “Brazil’s tradition of contract loyalty”, the large portfolio of projects and their excellent profitability the chambers of foreign trade.
Attracting national and international private capital is the way to fill the infrastructure deficit in Brazil, as the “delicate budgetary position”, which restricts public investment, restricts the infrastructure.
A passenger train meets a freight train of the Carajás Railway, built for the export of iron ore in northern Brazil. Railways in Brazil are mainly used for the transportation of grain and minerals, adding to the weight of raw materials in the economy. CREDIT: Mario Osava / IPS “The Ministry of Transport had 20 billion reais (then about 7.5 billion dollars) for investments in 2014 when it was only responsible for land transport; today the Ministry of Infrastructure has six billion reais (1.2 billion.) . Dollars) and oversees ports, airports, roads and railways, “he said, underscoring the need for private capital.
Brazil invested 2.2 percent of its GDP in infrastructure from 2001 to 2014 and “should invest four to five percent to overcome its historical shortcomings,” said José Tadros, president of the National Trade Association.
That is much less than neighboring countries like Chile and Peru are investing in infrastructure, the consequences are high costs, “bad roads and ports, a lack of railways and intermodal connections,” he complained.
But “it’s a virtuous moment” in the railroad sector, with a sharp surge in investment following the renewal of existing concessions and the future construction of two new main lines, said Fernando Paes, executive director of the National Railway Transport Agency.
The National Logistics Plan of the Ministry of Infrastructure sets the target that the railways should transport 36 percent of national freight traffic by 2035, which corresponds to an increase of 70 percent compared to the current share.
Ferrogrão (part of the plan) is the “most important project in Brazil”, according to Freitas. The 933-kilometer route will mainly serve the export of soy and corn from the central north of the state of Mato Grosso, the largest producer of these exports in the country with 27 percent of the total volume. The northern Amazon route is used in place of the more distant southern ports.
A view of Brazil’s BR-163 motorway before its final northern section was paved in 2020. It is mainly used for the export of soy from the state of Mato Grosso. Now a railway line is to be built next to it to make grain transport cheaper. CREDIT: Fabiana Frayssinet / IPSExports are currently being transported on the BR-163 motorway, the asphalting of which was only completed in February 2020 after trucks loaded with soybeans got stuck in the mud while crossing more than 900 kilometers of Amazon rainforest to reach the Port of Miritituba on the Tapajós River before the soy is transported over 1,100 kilometers downstream to the Atlantic ports.
The railway serves the interests of the multinational corporations that dominate these Brazilian exports and global agricultural trade, such as the US companies ADM, Bunge Limited and Cargill.
But Ferrogrão will make these exports cheaper to transport and help lower freight costs across the country by expanding the scope of agricultural exports across northern Brazil and creating a logistical hub between the heart of the Amazon and central Brazil, the Infrastructure Minister hopes.
Products from the Manaus Free Trade Zone, an industrial park in the capital of the state of Amazonas, will reach key national markets via waterways and rail, he predicted.
He also said the construction will have a positive impact on the environment by reducing greenhouse gas emissions from trucks and curbing more intense deforestation from roads.
But environmentalists and advocates of indigenous rights disagree.
“It will encourage the expansion of agricultural boundaries in the Amazon rainforest, where there is a lack of governance leading to deforestation,” said Sergio Guimarães, executive secretary of the infrastructure working group, in a telephone interview with IPS from Brasilia after the press conference.
The environmental impact assessment does not include the project’s indirect impact on an area wider than the railroad line and its edges, he said. Cheaper, large-scale transports tend to expand the production area in a region that is already affected by huge monocultures on the edge of the Amazon rainforest.
A street in the Brazilian state of Mato Grosso with an endless line of trucks carrying soybeans and corn for export. By 2035, at least 36 percent of freight traffic in the continental European country is to be handled by rail. CREDIT: Mario Osava / IPS In addition, further supply and demand studies and comparative analyzes of alternatives are required, said the activist.
For the transport of soy and corn exports from the central north of Mato Grosso, three railway projects were presented, which currently amount to 70 million tons per year and will increase to 120 million tons in the near future, according to Freitas.
In addition to Ferrogrão, an isolated line in the north, the Central-West Integration Railway (Fico) will connect from the east to the north-south railway that is already in operation and has access to ports in the north-east and south-east of Brazil.
The third alternative is a proposal by the Rumo company to expand its northern network, which now extends south of Mato Grosso, to the center of the soy growing region. This network has the advantage of being connected to railways with access to Santos, Brazil’s main export port, and crossing the state of São Paulo, the economically most productive and populous state.
But “there is not enough freight to make the three railways profitable,” said Guimarães, who calls for comparative studies of the other projects and concessions of the infrastructure ministry for logistics.
Other risks related to the ferrogrão identified by Guimarães include the possibility of congestion and accidents on the Tapajós-Amazon waterway when most of Mato Grosso production is exported via this route, and fluctuations in river courses due to climate change.
Another railway line, the West-East Integration Line (Fiol), which crosses the northeastern state of Bahia and received a 537-kilometer stretch to a mining company controlled by the Kazakh Eurasian Resources Group, is also facing ecological resistance as it does the local Biodiversity threatens the area in which a port is to be built.
The minister announced that ports, which were a “bottleneck” for export, would also be improved and largely privatized.
And waterways, an undervalued resource in Brazil, are also being included in the transformations its ministry plans to make. But it is precisely here that the effects of climate change with a severe drought in the Midwest and Southeast of Brazil are already being felt most strongly. Shipping on the Tietê River, which crosses the state of São Paulo in southeastern Brazil, is expected to be suspended.
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