President of Brazil Michel Temer has made elaborate plans to privatize the country’s basic services like water supply, sewage systems, airports, federal highways and dispose of oil and gas fields. A number of state controlled concerns will also be sold off. The plan is dubbed Projeto Crescer or in English, Project Growth. The government of Brazil hopes that it will save resources by partnering with the private sector. A public private partnership will be used to construct and also manage the infrastructure system of the country.
Selling off concession rights
The Brazilian Government has already sold off concession rights to four airports: Porto Alegre, Fortaleza, Salvador and Florianopolis. Concessions related to a number of rail lines and federal highways were also auctioned off. The list includes the famed North-South railway. The lines of these railway passes through states of Tocantins, Sao Paulo, Goais and Minas Gerais. The federal Brazilian government will also shake off responsibility of managing companies operating in the states of Rondonia, Amazonas, Acre, Piaui and Alagoas. In short, about 25 projects spread across sanitation, transport and energy sectors will be pushed towards privatization. The mining sector will have four concession projects. The bid to attract foreign capital is seen in the government literature itself. The bidding rules and the calls will have both Portuguese and English scripts to help attract foreign investments into Brazil.
Icing the investment cake
Foreign investors are much sought after in Brazil. To make sure they put their money in the Brazilian economy, the concessions are made with maximum technical accuracy. Only projects which have the effective capacity to produce returns to investors and society are being offered. Moreira Franco of Investment Partnership Program, said that ideology will not replace economic feasibility. Both tariffs and the return rates will depend on the technical studies, and not on the will of any political honcho. All contracts will be clearly stated. The service quality will be set by performance result clauses. The latter will also be the ultimate aim of the concession. The investors will have knowledge of what targets must be achieved and how their accomplishments will be measured.
Only environmentally sound projects and those who have licenses already issued will be given. The Brazilian private sector has welcomed such initiatives. It says that there is a dire need to grow after two difficult economic turns. Associations of industry said that the Brazilian economic system must be changed to make the country more attractive for investments.