Source Revista Ferroviária
Government announces more investments in PAC
Concerned with the deepening of the economic crisis in Brazil, the Government announced actions to extend the Growth Acceleration Program (PAC). The plan is to enhance in almost USD 43.5 billion in this year and in the next one the investments of the public sector in the program, including the resources proceeding from public companies, as Petrobrás and Eletrobrás. The railroad sector is one of the areas which will get more attention with this new PAC’s stage.
By means of concessions to the private sector, the government intends to bid the construction of new railroads and also of stretches of existing railroads or under construction. One example is the connection of Norte-Sul RR between Anápolis (Goiás State) and Panorama (SP). Another project includes the construction of a railroad between Ilhéus (Bahia State) and the State of Tocantins - called Oeste-Leste Railroad - and of another one from Tocantins State until Rondônia State. The objective is to make the connection of Brazil and the Pacific Ocean, exit door of exports to Asian continent.
The minister of Casa Civil, Dilma Rousseff, must announce an important change in the concession model. The idea is that the winners of concessions in railroad sector are obliged to invest within a given period, or they will lose permission. Today, there is no obligation. Government’s advisers informed the new rule applies also for the old cases, companies which received the granting of a service, but did nothing.
"We will finish with this history of the company that wins a concession intending only to impede that its competitor explores it", said a minister of the Government Brasília (Distrito Federal State). An example of non-exploited concession, but already overcome, according to the government, is the one of Transnordestina RR, under responsibility of the Companhia Ferroviária do Nordeste (CFN), a subsidiary of the Companhia Siderúrgica Nacional (CSN). "Now, anyone who wants a concession will be obliged to explore it."
Still in the railroad sector, the Government’s favourite project is the high speed train which should be built between the airport of Viracopos, in Campinas (São Paulo State), and the Rio de Janeiro State. The work will be included today in PAC. As the government will promote an international bidding and require technology transfer, the plan is to create the Railroad Office, a small public company facing to the administration of this technology and to the preparation of strategic planning of the sector, just as EPE (Energy Research Company) makes in electric sector.
There is an obvious explanation for the Government’s effort in increasing public investment. The investments of the private sector, which were growing before the crisis at a 2.5 times greater speed than the growth speed of the Gross Domestic Product (PIB), are vanishing. The industrial production data disclosed by the IBGE (the Brazilian statistics institute) show that the use category that more fell in December was of capital goods (machinery and equipment) - 22.2% in relation to December 2007.
Companies, therefore, have braked as regards to the purchase of machinery to sustain the production expansion. The numbers of the last quarter of 2008, just the most acute phase of the crisis until now for Brazil, will certainly show strong decline of the Formação Bruta de Capital Fixo (FBCF), the indicator which measures the rate of investment of the economy.
To have an idea, in the third quarter of last year, the FBCF expanded 19.69% as regards to the same period of 2007, taking the nominal investment rate to 20.42% of the PIB. It is true that, as the economy was growing fast – between past July and September, it has progressed 6.8% in annual terms -, companies are now getting rid of their stocks, a process which may take still some months to be concluded. When that happens, the production is supposed to grow again, although not at the levels prior to the crisis.
It is not at random, therefore, that the government counts with Petrobrás to increase investment in the productive sector. In 2007, Petrobrás answered alone with 9% of the country’s FBCF. This year, with the USD 28.6 billion in new financial implementations already announced, the public company should increase its proportion in FBCF, since the private sector is retracted.
For its part, the Government intends to extend in 2009 the investments of direct administration. In 2008, PAC (excluded the money of state and private companies) represented only 24% of the investment paid by the Federal Government, in a total which reached 0.9% of the PIB (approximately USD 11.7 billion). The target now it is to increase this value to at least 1.2% of the PIB. For its turn, Petrobras invested last year an amount equivalent to 1.1% of the PIB and aims to increase its slice this year to something around 2% of the PIB.
The effort of the government to extend the investment is meritorious, since maintaining the fiscal responsibility. Because of the crisis, Brasília took upon itself the responsibility to make the investments to maintain the economy growing. The problem is that the Government, any government, has no operational conditions for doing much more than it already has done.
The Government estimates that a public work of infrastructure takes 33 months to start at best or, in other words, when it doesn’t face any judicial or administrative obstacle. When one adds to this the project’s execution time, this is crystal clear that it is not a reasonable period – just to exemplify, the Santo Antônio hydroelectric plant at the Madeira river should take ten years from conception until the completion of the work.
Today, there are all kinds of interferences in investment decisions of the Government. Institutions as the Court of Accounts of the Federal Government, which should analyze the projects after the implementation, turned advisory bodies. This, of course, slows down the works, when not blocks them. Although the merit of being a project which structures the logistics of the country, PAC is marked by slowness.
CH-6422 Steinen, SZ