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June 11, 2015

Brazil's Rousseff aims to lure $64 billion in infrastructure capital

 by Alonso Soto and Anthony Boadle - June 9, 2015
Clipping from
Reuters


President Dilma Rousseff unveiled an effort to draw 198.4 billion reais ($64 billion) in private investment to build, upgrade and operate Brazilian roads, railways, airports and harbor terminals.

The infrastructure plan is meant to restore growth to Brazil's faltering economy and raise Rousseff's popularity, which has been battered by high inflation, rising unemployment and a corruption scandal at state-run oil company Petrobras.

A government presentation on Tuesday, however, said 65 percent of the investment would only kick in as of 2019, after the end of Rousseff's second term in office.

The World Economic Forum ranks Brazil only 120th out of 144 countries for overall quality of infrastructure, with roads and air transport being especially bad - a shortcoming long seen as being a drag on productivity and efficiency.

The plan aims to correct the failings of previous concession sales which drew scant interest because of excessive state intervention. Rousseff is offering investors better terms this time, though low-cost financing from development bank BNDES has been reduced in the midst of Brazil's fiscal crunch.
Bidders will be expected to partially fund projects with private financing raised through infrastructure bonds.

Rousseff said the new round of concessions will expand the government's partnership with private companies and bolster confidence in the economy, now on the brink of recession.

"Our model of concessions will guarantee that consumers get quality services at fair prices and companies get an adequate return on their investments," Rousseff said during the presentation at the presidential palace.

 
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