Brazil embarks on wide scale privatization of logistics infrastructure

Brazil logistics opportunities

The issue of Brazil’s freight transport infrastructure continues to be problematic. The country has a large mining and agricultural sector that needs a competitive logistics infrastructure but it does not really have one. In order to rectify this, the government of Jair Bolsonaro has embarked on a programme of privatization, hoping to both generate revenue for the Brazilian State and investment in the transport sector.

A new minister of Infrastructure, Tarcísio Gomes de Freitas, has been appointed by Bolsonaro with a remit to manage the large programme of concession sales which has already raised significant sums in revenue and promises of investment. Already a reported 22 airports, five ports and a railway line have been sold or leased over the past few months with the French infrastructure group Vinci winning concessions for seven airports.  

de Freitas told the Financial Times on Monday (May 24) that “with the planned concessions, by the end of 2022, $50bn will have been contracted in investments for the modernisation of airports, ports, highways and railways. In other words, the equivalent of more than 30 years of the public budget for infrastructure.”

Yet this is not the first time that Brazil has attempted to deal with its logistics infrastructure problems.

The government of Dilma Rousseff announced a series of large new projects focussing on building new ports and railways. Some progress was made but in key areas such as rail-freight supporting agri-bulk problems remained. A key barrier was the ability of both local political lobbying and regulatory bureaucracy in slowing or halting developments. The Bolsonaro government’s approach is designed to mitigate this by placing more of the infrastructure in private hands, yet the institutional problems persist. Indeed, some of Brazil’s most pressing problems in logistics remain in ‘soft’ infrastructure such as customs processes.

The potential for logistics infrastructure investment in Brazil remains substantial and delivering such investment would be very good for Brazil. Yet, despite the vigour of the present government, there is still a long way to go.

Source: Transport Intelligence, May 25, 2021

Author: Thomas Cullen