High oil and steel prices lead government to review costs of concession projects

The rise in commodities since the outbreak of the pandemic, in particular oil and steel, has forced the federal government to review the financial parameters of concession auctions already underway.

The statement was made this Thursday (28) by the Secretary of Development, Planning and Partnerships of the Ministry of Infrastructure, Natália Marcassa, at a seminar on long-term public-private investments, organized by Fiesp (Federation of Industries of the State of São Paulo) and by the TCU (Union Court of Auditors), at the federation’s headquarters, in São Paulo.

“The increase in asphalt inputs was of the order of 43%. And the increase of steel, of the order of 36%. With that, from January, we had to remodel our projects, already capturing these costs”, says the secretary.

In January, according to her, Dnit (National Department of Transport Infrastructure) published the Road Cost System, measured by the FGV (Fundação Getúlio Vargas) every three months, which would have captured the rise in prices after the beginning of the pandemic.

The secretary cited the case of the concession of the road system that connects the city of Rio de Janeiro to Governador Valadares (MG), whose auction is scheduled for May 20.

According to Marcassa, the public notice was republished in February, changing the expected costs, which on average increased by 23%.

For Morgan Doyle, representative of the IDB (Inter-American Development Bank) in Brazil, the cost shock mentioned by the secretary was not enough to take away the appetite of private investors to invest in infrastructure in Brazil. “They’re still interested,” he says.

The event is part of a series of seminars organized by Fiesp and TCU with the aim of discussing strategies to unlock investments in infrastructure in the country.

This Thursday’s session was opened by the president of the federation, Josué Gomes da Silva, and the minister Bruno Dantas (TCU).

Also participating were the president of the BNDES (National Bank for Economic and Social Development), Gustavo Montezano, the chief economist of the World Bank, Luis Andrés (via videoconference), among other speakers.