Latin Finance - March/April 2010 - 54

Brazil infrastructure investment New Model Hopes Fade by John Rumsey I n 2007, after a plane accident in which 199 people died, a short-lived movement to protest Brazil’s woeful infrastructure was born. But the cansei (“I’m tired”) movement withered because of president Lula’s popularity and the homogeneity of its elitist membership. The protest may have died, but the logistics issue has not. Brazil winning both the 2014 World Cup and 2016 Olympics, on top of forecast 2010 GDP growth of 5%, have pushed infrastructure to the top of Brazil’s priorities. On paper, much appears to be getting done. By 2014, Brazil is set to spend some $92 billion per year on infrastructure, compared to $61 billion in 2008 and just $30 billion in 2003, says Paulo Godoy, president of the Brazilian Association of Infrastructure and Basic Industry (ABDIB). He has been travelling the world to speak to investors and drum up interest in the sporting events and explain the opportunity. Local construction companies like Odebrecht are likely to beneﬁt signiﬁcantly. The company is focused on engineering including construction of metro systems and mass transit systems, as well as the construction and modernization of arenas, says João Borba, director of business Infrastructure tops the agenda after Rio celebrates Olympics win development at Odebrecht. Brazilian companies will likely joint The problem for investors is that plans to bring in the private venture with foreign ﬁrms for know-how and technology, says sector are being dropped in favor of safer public works contracts José Roberto Martins, partner at law ﬁrm Trench, Rossi and for a number of interlocking reasons. Watanabe, Baker & McKenzie’s associate in Brazil. Companies First, the government is keen to ensure the work gets done with experience of the World Cup in South Africa to be held this on time, and so is o ering hefty ﬁnancial assistance. Second, year could particularly beneﬁt, he adds. the International Federation of Association Football (FIFA) has been stepping up provisions on security and the environment, Private Sector Frozen Out making contracts more complex. For many investors, however, interest is already on the wane, at “FIFA is constantly changing its mind and adding least for the soccer tournament. Initially, there was optimism that requirements and costs and that has made it hard for municipal and state governments might experiment widely with > municipalities to ﬁnalize stadia contracts,” says Mauricio public private partnership (PPP) contracts, concessions or Build, Girardello, a partner at PricewaterhouseCoopers (PWC) in Operate Transfer and models that include the design stage too, São Paulo. That has already compelled some municipalities to says Martins. That hope is more timid now. redraft contracts to incorporate additional demands, he notes. The World Cup and Olympics offer a once-in-a-lifetime opportunity for Brazil to engage the private sector and foreign banks to update infrastructure. 54 LATINFINANCE March/April 2010
Latin Finance - March/April 2010

Table of Contents for the Digital Edition of Latin Finance - March/April 2010
