Concessions could generate BRL 160 billion in transport and sanitation by 2026, says Abdib

Concession projects that have already been tendered or are under auction will add R$ 160 billion to the investment curve in transport and sanitation in the country, according to an estimate by Abdib (Brazilian Association of Basic Industry).

The two sectors have had a series of projects auctioned in recent years, with emphasis on the concession of the operating area of ​​Cedae (State Water and Sewage Company), in Rio de Janeiro, and the Presidente Dutra Highway, which connects São Paulo to Rio of January.

According to Abdib, the analysis of projects that have already been tendered or to be tendered indicates that the sectors will receive R$ 19.2 billion in 2022 and will have an investment peak of R$ 43.7 billion in 2024. At the end of the period studied, the contributions will be R$ 28.5 billion.

In its Blue Book on Infrastructure, Abdib says that the different spheres of government in the country prepare around 1,600 opportunities in concessions or PPPs (public-private partnerships). And he cites the federal government’s PPI (Partnership and Investment Program) as one of the engines of this scenario.

With the positive results, the minister of Infrastructure, Tarcísio Gomes de Freitas, came to be seen at the Planalto Palace as a poster boy for the government for always delivering “good news” to the president.

“Results regarding the improvement of governance, transparency and dialogue with the private sector were clear and recognized by the market”, states the study. “Well structured projects were auctioned, achieving success in their objectives.”

The organization says that the advance is “unequivocal” but that investments in infrastructure in the country are still insufficient to meet the needs of the sector. In 2020, the infrastructure received R$ 124.2 billion, down 3% compared to the previous year.

The drop was driven by the share of public investment, which dropped from R$42.3 billion to R$26.2 billion. Driven by concessions and PPPs, private investment rose from R$ 85.8 billion to R$ 98 billion.

The amount invested in 2020 represented 1.47% of the GDP (Gross Domestic Product), well below the 4.31% that the entity considers necessary to supply the country’s infrastructure bottlenecks. But the only sector that had suboptimal contributions was transport.

Considered by Abdib “the two most backward sectors in infrastructure”, transport and sanitation received BRL 36.3 billion in 2020. The value is higher than the average of BRL 32.1 billion per year expected for concessions until 2026, but it includes public contributions.

“We clearly perceive that we need much more private projects and also complementation of public investments in the period. We have to bet on both fronts simultaneously”, says, in a statement, Venilton Tadini, chief executive of Abdib.

He argues that the search for private investment should not eliminate public investment. “Brazilian governments need to review priorities and expand the budget for public investments. This is because not all needs can be met by private investment,” he said in the note.

Among the federal projects mapped for the next five years are railroads such as Fiol (West-East Integration Railroad), tendered in April, and investments guaranteed in exchange for the renewal of concessions for existing railroads.

There are also six rounds of airport concessions, three of which have already been carried out, and 14 highway projects. Presidente Dutra alone, a contract that includes a stretch of the BR 101 between Rio and São Paulo, will have investments of R$ 14.8 billion, according to the study.

In the 2021 edition of the Blue Book, Abdib also mapped the opportunities generated by states and municipalities, which accelerated concession and PPP projects in recent years with support from the BNDES (National Bank for Economic and Social Development).

According to Abdib, state and Federal District governments present more than 300 projects in areas such as transport, energy, sanitation, telecommunications and social infrastructure.

This list includes the sanitation concessions already auctioned this year, such as Cedae and areas in Alagoas, Amapá, Espírito Santo and Mato Grosso do Sul, for example. On the next 13th, Alagoas will auction the concession for the provision of services in two other regions.