New Stage In Brazil's Logistics Investment Program Offers Opportunities For Domestic And Foreign Investors

On 9 June 2015, Brazilian President Dilma Rousseff announced a new package of privatizations (concessions, leases and authorizations to be granted to private investors) related to infrastructure projects worth BRL 198.4 billion (~US$ 64bn), with BRL 69.2 billion being invested from 2015 to 2018 and BRL 129.2 billion from 2019 on. Investments under this new stage of the federal government's Logistics Investment Program (the so-called "PIL") are divided among four regulated sectors:

Highways (BRL 66.1 billion) Railways (BRL 86.4 billion) Ports (BRL 37.4 billion) and Airports (BRL 8.5 billion). Highways : Four auctions are expected to occur in 2015 which, when added to the recent renewal of the Rio-Niterói bridge concession, will make a total BRL 19.6 billion investment in the sector. The highways are: (i) BR-476/153/282/480/PR/SC, with 460 km; (ii) BR-163/MT/PA, with 976 km; (iii) BR-364/060/MT/GO, with 704 km and (iv) BR-364/GO/MG, with 439 km, totaling 2603 km in seven Brazilian states.

The year 2016 is expected to see 11 highway auctions, totaling 4371 km and an estimated BRL 31.2 billion in investment. There will also be new investment totaling BRL 15.3 billion in existing concessions. Two projects are already underway and another nine are being evaluated.

Concessions to operate highways will granted to the private sector by auction based on the lowest toll charged to users.

Railways : Medium and long-term investment in this sector under PIL amounts to BRL 86.4 billion. Some of the more important projects are: (i) the Ferrovia Norte-Sul (the North-South Railway), with an investment of BRL 7.8 billion in the stretches from Palmas in the state of Tocantins to Anápolis in the state of Goiás, and from Barcarena in Pará to Açailândia in Maranhão; and another BRL 4.9 billion in the stretch from Anápolis in Goiás through Estrela D'Oeste in São Paulo to Três Lagoas in Mato Grosso do Sul; (ii) the railway between Lucas do Rio Verde in Mato Grosso and Miritituba in Pará, with an estimated investment of BRL 9.9 billion; and (iii) construction of a railway connecting Rio de Janeiro to Vitório in the state of Espírito Santo, estimated at BRL 7.8 billion.

Most of these investments (BRL 40 billion) will be directed to putting the Brazilian stretch of the Bioceanic corridor in place. The corridor, which will link the Central-West and Northern regions of the country to Peru, was the subject of a recent international agreement with the government of China.

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