US$ 220.2 billion in opportunities for foreign investment

Brazilian National Development Program prompts US$ 220 billion in opportunities for foreign companies

08/04/2010 11:15 – Portal Brasil

Phase 2 of Growth Acceleration Program opens up great prospects for 2011-2014

BRASILIA (April 7, 2010) – On March 29, Brazil launched the second phase of its national Growth Acceleration Program (PAC 2), opening up US$ 220.2 billion in opportunities for foreign investment in Brazil over the period from 2011 to 2014.  PAC 2 is a four-year US$ 526 billion strategic investment program led by the federal government that combines management initiatives and public works projects. These projects focus on building Brazil’s national infrastructure, with emphasis on improving public transit, drainage, energy, transportation, logistics, roads and civil construction.

“The second phase of the Growth Acceleration Program opens a new range of possibilities for foreign investment in Brazil. This new round of development gives the private sector the predictability needed to evaluate business opportunities in Brazil over the next four years,” said Minister of Planning, Budget and Management Paulo Bernardo during a conference call on April 7 with foreign journalists and investors.

In the urban mobility sector, the possibilities for foreign participation could total as much as US$ 10.3 billion from 2011 to 2014. These investment opportunities include subway, light rail vehicle, bus rapid transit (BRT) and bus lane projects geared toward improving the quality of public transportation in urban areas – a primary focus of PAC 2.

In the port sector, international companies can participate in the bidding for 11 projects to dredge and deepen port seabeds. These projects will offer a total of US$ 498 million ininvestment opportunities, awarded via five-year contracts.

In the shipbuilding industry, the opportunities for service and equipment suppliers total US$ 20.8 billion for construction sites, platforms, rigs and large vessels to support the expansion of offshore oil fields in Brazil.

Also in the transport sector, three new railways will be built in the period covered by PAC 2. Foreign companies may seek participation in the development of these railways. The planned railways include lines connecting:

•    Uruaçu (GO) – Lucas do Rio Verde (MT) – 1,000 km
•    Panorama (SP) – Estrela D’Oeste (SP) – 364 km
•    Estrela D’Oeste (SP) – Dourado (MS) – 370 km

In the housing and civil construction sector, Brazil has allocated US$ 40.7 billion to construct 2 million homes through the federal government’s public housing program, “My House, My Life.” International construction companies may have access to these resources through partnerships with Brazilian contractors or through their Brazil-based subsidiaries. The program will prioritize housing for low-income families.

In the electricity sector, PAC 2 will present a total of US$ 36.2 billion in business opportunities for foreign companies related to 39 new hydroelectric plants and the “Light for All” Program, dedicated to extending electrical connections to urban and residential areas. The hydroelectric plants will generate 29.230 MW in total and will be auctioned in 2014. The “Light for All” Program has allocated US$ 3.1 billion to establish 495,000 new electrical connections over the next four years. The private sector will be invited to participate in supplying raw materials (e.g. electricity poles and other construction material), which will account for 15 percent of the US$ 3.1 billion, or the equivalent of US$ 469 million.

International investors will also have significant opportunities to participate in the exploration and production of oil, particularly in Brazil’s offshore pre-salt layer. In total, PAC 2 has assigned US$ 404.4 billion in investments (US$ 106.7 billion between 2011 and 2014, and US$ 297.7 billion beginning in 2014) for the sector. Foreign companies may participate as suppliers of equipment and services, contracted both by Petrobras and by local private companies. Similar opportunities will be possible for natural gas transportation, where US$ 4.6 billion will be invested.

Possibilities for international private sector investment in PAC 2:

Sector Amount
Urban Mobility US$ 10.3 billion
Ports (Dredging projects) US$ 498 million
Housing (My House, My Life program) US$ 40.7 billion
Electric Power US$ 36.2 billion
Oil US$ 106.7 billion (plus US$ 297.7 billion after 2014)
Natural Gas US$ 4.6 billion
Shipbuilding Industry US$ 20.8 billion
Total US$ 220.2 billion