Growth puts strain on Brazil infrastructure

What is keeping Miriam Belchior, Brazil’s minister of planning, awake at night – is it delays in the country’s plans to host the World Cup soccer final in 2014 and the Olympics two years later?

No, says the minister, it is Brazil’s airports, which are struggling to cope with annual average growth in passengers of 10 per cent over the past seven years on the back of an increase in the country’s middle classes.

“We have many problems to face before the World Cup,” says Ms Belchior, one of the most senior ministers in the cabinet of Brazil’s president, Dilma Rousseff, who took office in January. “The World Cup is a very short period – it’s possible to take other measures to meet the extra demand [for air travel] but the rise we have already seen and that we expect in the next few years will need to be dealt with now,” she said in her office in Brasília, the capital.

As Brazil’s economy races ahead, clocking growth of 7.5 per cent last year and with 4.5-5 per cent expected this year, its infrastructure is beginning to feel the strain.

Not only are its airports becoming overburdened but its ports, highways, urban roads and rail all need expansion. The plans to host two of the world’s biggest sporting events over the next five years are only putting these deficiencies into stark relief.

Brazil is planning to invest $562bn between 2011 and 2014 as part of a scheme known as the “Accelerated Growth Programme”, with 30-40 per cent of the total expected to come from the private sector.

Much of this is earmarked for mega-projects that the government wants ready in time for the Olympics, such as a $20bn bullet train between São Paulo, Brazil’s financial capital, and Rio de Janeiro, which will host the games.

But there is growing concern that preparations on the ground for both events have stalled. Brazil’s greatest footballer, Pele, last month released an almost anguished plea for the country to get its act together.

“Brazil is running a great risk of embarrassing us in how it runs the World Cup, principally in communications. The airports are frightening and not just for Brazilians,” he told reporters.

Ms Belchior said some preparations in Rio had been delayed by a natural disaster caused by flooding in the hills near the city in January and delays in appointing the head of the Olympic Public Authority, the co-ordinating body for the games, due to elections last year.

But she rejected Pele’s claim. “He is worried, just like all Brazilians are, that we do well in the Olympics but I believe that he is not following in detail all of the actions that are being done,” she said.

To speed up development of the airports, the government is about to create a new secretariat this month or in April to oversee the sector. As part of this, it will also sell shares in Infraero, the state-owned airport operator.

In Rio, the government had already recovered land and begun demolition to widen roads for the “TransCarioca”, a bus transport system that will connect the Olympic village and venues with the city’s international airport.

The rise in spending for the Olympics and the World Cup comes as the new government is trying to establish its credibility on controlling inflation – the traditional bane of Brazil, which has been rising towards the upper limit of the central bank’s target of 4.5 per cent plus or minus 2 per cent. Ms Belchior recently spearheaded the government’s pledge to reduce this year’s government budget by R$50bn ($30bn) to reduce inflationary pressures.

“For us it is clear, this is a monster that we cannot let come back,” said Ms Belchior.

Most believe Brazil will muddle through the World Cup and Olympics. A lack of power can be overcome by putting in generators, poor airport facilities can be dealt with by setting up special booths in the terminals to handle the extra passengers. The problem is that disorganisation will deprive the country of lasting benefits and could result in big cost overruns..

“I’m absolutely sure that everything will be ready but the problem is how much money will it cost for that. They will have to spend two to three times more and who will pay this bill?” said Otávio Augusto Martins Nese, president of the São Paulo chapter of the Project Management Institute.