MercoPress. South Atlantic News Agency
Brazil invites private sector to invest in new highways and railways plan
Brazil's government unveiled on Wednesday measures to lure up to 133 billion Reais (66 billion dollars) in private investment for new roads and railways needed to unclog the country's transportation bottlenecks. Read full article
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Disclaimer & comment rulesProjects of this magnitude take time and real experience. Luckily Brazil has several world-class engineering and construction entities. Obviously- by signaling to the big private corporations, that they are part of the national team - Dilma is getting ready for her second term run 2014. She needs the support of the nationalists and the political center. Obviously, the Left is with her anyhow. Her coalition consists of 10+ political parties, including the bigges party in Brazil, the PMDB - which represents many of the 5+ million farmers.
Aug 16th, 2012 - 03:04 am - Link - Report abuse 0The key word here is “concessions”. What it means basically is that private enterprises will “invest” in highways, which will become very expensive toll-roads, as it happened in Spain and Mexico, where there are many toll-roads nobody uses because they are super expensive, to the extent that many a time local governments end up bulding their own parallel public high-ways next to the toll-ones.
Aug 16th, 2012 - 03:29 am - Link - Report abuse 0It doesn´t work. The government has to invest in public roads and that is an obligation that must not be ceeded or passed on to private enterprises who will look at it purely as a business opportunity. I am not against private enterprises participating in many infrastructure projects, but not on roads.
it's the private sector with government organization (BNDS).
Aug 16th, 2012 - 05:33 am - Link - Report abuse 0Not the case in Europe nor in the US, where infrastructure are crumbling. But ach..austerity will do fine.
It will allow things to be done.
Aug 16th, 2012 - 02:05 pm - Link - Report abuse 0Subsequently it can all be nationalised. As Think put it “It's the South American way”.
Ottona: nice post, that is an interesting angle.
Aug 16th, 2012 - 03:23 pm - Link - Report abuse 0Jose: I agree in principle, but it really depends how much the government has to spend. In Chile we did the same thing. The highway north from Santiago was horrible, they concessioned it and now we have a very decent highway – but with expensive tolls. I would prefer we had good quality free roads like in the UK (don’t know what Fido is on about), but without the associated debt. Sometimes it is easier to do a deal with the devil.
Sounds purely capitalistic for private entities to own such a publicly needed asset. Not even in the USA does private business own highways. Maybe her plan is to have private business pay and build roads then expropriate them. ........then Argentine model.
Aug 16th, 2012 - 04:17 pm - Link - Report abuse 0Brazil's government is riddled with corruption and infrastructure projects are a favorite for the corrupt politicians. Privatization is a great choice for Dilma; even though I dislike her in most principles, I have to congratulate her on this move.
Aug 16th, 2012 - 05:02 pm - Link - Report abuse 0#6 There are private highways in the USA - Indiana Toll Road, Google it.
#2 Private investment does work. The states of Sao Paulo and Parana in Brazil have privatized several highways that were before run by the state. Today they are perfectly maintained, with great emergency services and will come and even change your tire or help out with car problems at any time. Yeah we have to pay for the tolls and those can be expensive, but you should pay for any service you use. If taxes are lowered since the government won't need to maintain the highways anymore, then everyone will benefit.
#7 You can discern the difference between OWEND and LEASED Si?
Aug 16th, 2012 - 07:58 pm - Link - Report abuse 0https://www.getizoom.com/aboutITR.do;jsessionid=5A8E955277F46C3854ED90EDFDF5A63E
Still owned by the State of Indiana and leased and operated by the Spanish company Cintra.
I would say something if BAMF had not summarized what i think . Clearly, you know little bit of economics, to claim that state-run enterprises would be more efficient than private enterprises. Maybe in social democracies, where people actually knows the meaning of PUBLIC service and citizenship. This cannot be applied to countrys such as mine, nor any latin american territory.
Aug 16th, 2012 - 10:31 pm - Link - Report abuse 0#8 You are correct, Indiana Toll Road leases the public asset which is the highway. There are a few highways that are owned by private companies in the USA, but yes most are leased for up to 99 years (Dulles Greenway - I Googled it). Regardless, my point was that the government does a crappy job at building or running anything; especially a corrupt government like Brazil's. So Dilma letting the private sector take over is a great idea. Plus it won't be privately owned, best case just leased.
Aug 16th, 2012 - 10:40 pm - Link - Report abuse 0Perhaps it will work for Brazil. Here it is a state by state issue.....some states do a great job, some states suck in road maintenance. I've been in business in the past that had many government contracts. While it may by 99 stated years, believe the government can legally cancel it before 99 years if need be.
Aug 16th, 2012 - 11:47 pm - Link - Report abuse 0I don´t think privatizing the roads is going to deliver the services and the infrastructure the brazilian masses need, just like in Mexico, Spain or Chile, the toll-roads will be prohibitely expensive and will result in more costly transportation of goods and people.
Aug 17th, 2012 - 03:56 am - Link - Report abuse 0Brazil´s government is famous for its state-run enterprises, why do they want to lease or give away high-way consessions? because it isn´t oil? that´s why they are not willing to invest billions of dollars there? because they “think” there are no vissible profits in providing high-ways to millions of people and joining communities together accross the country? Give me a break. Something smells wrong in here.
Building roads and providing securiy has been the primary function of the state from Roman times, they do it better because they build them taking into account many factors, not just profits, but also social and development factors.
I am in favor of private enterprises participating freely in all sectors of the economy, in fact I am not in favor of having government mammut enterprises dominating industrial or energetic sectors of the economy. But roads, security, public education, social security, public health, those are all responsabilities of the state.
State or private - I don't care, but what I would really like to see is Brasilian roads with **foundations**.
Aug 17th, 2012 - 12:12 pm - Link - Report abuse 0To have your roads break up and wash away with each year's rains is unacceptable.
Comment removed by the editor.
Aug 17th, 2012 - 02:18 pm - Link - Report abuse 0Jose - The problem with...
Aug 17th, 2012 - 03:35 pm - Link - Report abuse 0But roads, security, public education, social security, public health, those are all responsabilities of the state.
...is that the government does a crappy job at these things. Government building roads, providing education/social security/health care, negatively affects the poor more than anyone else. First, in most countries (there are exceptions), these government services suck; Brazil is a great case. Secondly they cost too much for what you get out of it; this means there is rampant corruption in government socialized services (again there are exceptions, but specifically we are talking of Brazil here). Finally the people that end up paying for these services are the poor. How you ask? Well businesses that have to pay the taxes that are utilized for these social services will simply pass the extra cost to the consumer. So you tax the milkman, and your milk will cost more. Gas is more expensive in Brazil because of the taxes. And the people that most feel these price increases are the poor. And what do they get out of it, some crappy service. Government just isn't as efficient (more bang for your buck) as the private sector. It spends money where money shouldn't be spent. Like random highways and bridges to tiny communities in the middle of nowhere.
After 16 months in Uruguay I think the problem with the roads is one of the national psyche and it effects all levels of society.
Aug 17th, 2012 - 07:45 pm - Link - Report abuse 0Most 'tradesmen' such as builders, etc. have the mindset that doing 75% of the job is 'perfection'. Why, they ask me do I insist that they only use the products from one Barracca when there are other, cheaper suppliers? They just do not get the idea that spending on quality is worth doing.
The normal road system in Uruguay is typical of what I have seen in third world countries. Scrape off the overburden (earth, grass and weeds), roller what remains and then put 25 mm of blacktop onto it. After a few trucks have gone over the edge onto what laughingly passes as a shoulder and broken the consolidation up, you are left with very large shelled edges and grit and dirt over the width of the road. When it rains the water gets under the blacktop and then craters appear everywhere.
But, of course, when the local elections are on the incumbents promise they will repair the roads, even though they have not touched them for months. And they get voted back in!
Is it a LatAm thing?
Chris,
Aug 17th, 2012 - 08:05 pm - Link - Report abuse 0I'm told the voters prefer it this way...
All-year-round hole-filling employs thousands of less skilled individuals.
It also creates employment in off-street car repair shops.
The one thing it does not do is allow the country to develop.
Developed nations' road building standards are not there just for fun - they actually mean something, and help a county get moving and keep moving.
And yes, holes get filled in in the days/weeks before every election.
Chris, just like Geoff said, it is a way to keep getting voted back in, but does nothing for the country. Yeah developed countries are better, but they still will build a road, bridge, subway, when one is not needed or not choose the proper materials. Politicians are bad administrators of money.
Aug 18th, 2012 - 02:19 am - Link - Report abuse 0LatAm is like this because they decided to go socialist before they had any decent political structure. Socialism is the spreading of wealth but not the creation of it. When you spread it around, some gets left for opportunistic politicians and in the case of LatAm where corruption is rampant, then you get stupid shit like you see there in Uruguay with the shitty roads. As for the private sector, the economy is too small and there isn't enough competition yet. If Uruguay is anything like Paraguay, you have one well know dude that makes the best windows, another that does tiling real well, etc. etc. So there isn't any incentive to do better quality work. Plus most locals don't demand the higher quality and thus are unwilling to pay for it.
@ 17 & 18
Aug 18th, 2012 - 11:11 am - Link - Report abuse 0Thanks guys, you have 'enlightened me about LatAm socialism also, :o)
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