Brazilian infrastructure auctions clouded by pandemic, politics, minister says
SAO PAULO, Aug 16 (Reuters) – The COVID-19 pandemic and domestic political concerns may hurt the ability and willingness of firms to bid for major infrastructure concessions in Brazil, Infrastructure Minister Tarcísio Freitas said.
The remarks by Freitas, one of the most high-profile ministers in right-wing President Jair Bolsonaro’s cabinet, could mean trouble for key concession auctions this year and in 2022. That includes the proposed Ferrograo railway, which would connect Brazil’s midwestern soy belt to northern ports.
“We’re going through a pandemic and many companies are having difficulties with cash,” he said in an interview with Reuters on Thursday. “With some projects, it’s natural that interest is restricted to just a few groups. It’s important to bring in those who are qualified.”
Brazil is entering a crucial phase of its 2019-2022 concession plan, which the government has forecast will bring in some 250 billion reais ($47.7 billion) in investment.
Among the major concessions on that list is the right to operate the Via Dutra, the main highway linking Sao Paulo and Rio de Janeiro, for 30 years. The number of candidates interested in that concession will be limited, Freitas said, given the high costs involved. The winner will be expected to invest some 15 billion reais in the roadway over that period.
By far the most ambitious project on the government’s agenda, the 933-kilometer (578-mile) Ferrograo, which would link the top grains state Mato Grosso with the northern state of Para, is facing serious headwinds, Freitas said.
Activists inside and outside Brazil have criticized the impact it may have on the environment and indigenous groups. Currently, the project is being held up by Brazil’s Supreme Court and the federal audit court, known as the TCU.
Bolsonaro has clashed with some members of the Supreme Court over a range of issues, including his government’s handling of the pandemic.
“The environment (for the Ferrograo) isn’t among the best. In normal conditions, it already wouldn’t be a favorable scenario,” Freitas said. “The Ferrograo will happen, but we’re losing time with the ideological, commercial and political components.”
Along with overseeing Brazil’s infrastructure plans, Freitas has been the point man in Bolsonaro’s cabinet for relations with the nation’s fractious truckers.
A strike by truckers in 2018 brought the economy to a standstill for weeks and undercut then-President Michel Temer’s political support.
Diesel prices have already risen some 40% in 2021, raising fears of a repeat of the crisis three years ago, but Freitas said that, for several reasons, another crippling strike is unlikely.
“In recent years, a part of the market was taken over by big logistics companies and, if they don’t support (a strike), it’s not going to happen,” he said.
He was emphatic that the government will not intervene to set freight prices, as had occurred under previous governments.
“They’re used to being patronized by the state,” he said of Brazil’s truckers. “The government is not going to get into freight prices. The state has nothing to do with that.” (Reporting by Aluísio Alves; Writing by Gram Slattery; Editing by Brad Haynes and Paul Simao)