Brazil Faces 2014 Infrastructure Race

By Nathan E Williams, Contributing Reporter

RIO DE JANEIRO, BRAZIL – On Tuesday November 10, 2009 a massive power failure left an estimated 60 million people in eighteen Brazilian states without electricity as a result. This wasn’t the first time Brazil had experienced a massive power failure but officials certainly hope it will be the last.

With Brazil due to host the World Cup in a little over three years’ time and the Olympics in 2016, this is the nightmare scenario the nation is desperate to avoid.

The signs thus far, however, are ominous. The extension of the Rio metro to Barra da Tijuca, the site of the Olympic village and home to the majority of 2016 Olympic events, is now not expected to be completed until three months before the start of the Games.

This and the recently announced delay of the bidding deadline for the high-speed train planned to link Rio de Janeiro and São Paulo, are raising concern over Brazil’s ability to improve infrastructure fast enough, and conflicting reports if developments are on, ahead or behind schedule.

Sepp Blatter, the FIFA president warned Brazil last month to speed up its stadium and infrastructure improvements. However Jacques Rogge, the IOC president, said he was confident that Rio’s Olympic planners would meet their deadlines after a separate presentation last week.

With the eyes of the world watching, it is clear that any major disappointments would seriously damage the credibility of a country soon to be the fifth-biggest economy, according to finance minister Guido Mantega.

Since the beginning of the decade steps have been taken to tackle the energy shortage and infrastructure has improved markedly in many areas. Despite these improvements there is much still to do.

The country has 982,000 miles of road but only 132,000 miles is paved, says the National Transport Association while the United Nations World Tourism Organization (UNWTO) ranks Brazil 95th out of 130 countries for the quality of its transport infrastructure.

Brazil will need to assail the UNWTO rankings rapidly if it is to cope with the demands of an additional 600,000 visitors during the World Cup and an expected 10-15 percent increase in foreign tourists during the Olympics in 2016, according to the Ministério do Turismo (Ministry of Tourism).

The government has committed to spending R$959 billion on infrastructure projects by 2014 under its PAC 2 ‘Accelerated Growth Program’ and R$631 billion beyond 2014, capital which is channeled in part through Brazil’s national development bank, BNDES.

The bank, which received R$80 billion from the Treasury last year, lent R$168.4 billion to investors in 2010 according to the BNDES website.

While this spending may appear beneficial, because the bank is able to lend money at below market rates some believe it is harming not helping. “The BNDES has an important role to play in long term operations, but it is still hampering the presence of the private sector,” Murilo Portugal, president of the Brazilian federation of banks said recently.

Of the R$22 billion Brazil plans to spend on transport projects designed to ensure the smooth running of the World Cup, more than 98.5 percent will come from the public sector, according to a recent report by the Tribunal de Contas da Uniao, the official accountability arm of the Brazilian government.

While the world’s two biggest sporting events have thrown Brazil’s infrastructure challenge into sharp focus, these challenges are about more than mere sport. First class airports, roads, ports and reliable energy networks are the hallmarks of mature economies and enable countries to compete more effectively. For Brazil to reach the next stage in its development it first needs to ensure its goods and people can get from A to B more easily.