Country to invest US$ 1.99 trillion in infrastructure by 2014

The perfect binomial between oil and electrical energy will speed up the growth of the country with total investments adding up to more than half a trillion Brazilian Reais over the next four years. This calculation was made by the National Bank for Economic and Social Development (BNDES) on updating its mapping of investments, which suggests a total inversion of US$ 1.99 trillion in the economy between 2011 and 2014.

The figure has been forecast based on information about projects that are currently in the pipeline in industry, construction and infrastructure, in 15 sectors, which account for half the total investment in the national economy.  This total sum reached US$ 963.9 billion, which is 62% more than the total investment made between 2006 and 2009. This piece of data is also double what the bank had detected in a previous study for industry and infrastructure between 2010 and 2013.

The chain of oil and gas also drew attention, soaring from the US$ 177.71 billion of the previous study to a new level of US$ 227.71 billion in the four-year period which started this year. When compared with the US$ 123.49 million invested between 2006 and 2009, the exploitation of oil and gas will push the rate of industrial growth with an increase of 84% in inversions to 2014.

The BNDES study includes the plans of Petrobrás and also the private sector, considering just a fraction of the US$ 27.11 billion of the inversions expected for the pre-salt. Oil and gas will continue to be the motor that pushes along industrial activities, and there is no doubt about this. The big challenge is to bring this investment into the economic structure of the country.

Production has grown very fast, and in a short time, but the capacity shown by national industry to take advantage of this fact was not so good, says Ernani Torres, who is the Superintendent of the Research and Economic Monitoring Area (Área de Pesquisa e Acompanhamento Econômico – APE) of the BNDES.

On the other hand, the investments of the mineral extraction industry and steel casting should slow down. With the recent increase in commodities, which led Vale to have a record profit in 2010 and also to make large investments, the comparative base for the projects of the mining companies has become high. They will invest some US$ 37.35 billion over the coming four years, the same level as between 2006 and 2009.

The steel production area will raise their project volume by 17% in this comparison, with a total of US$ 19.88 billion between 2011 and 2-14, but the figure also shows a reduction compared to the previous BNDES study. The bank has mentioned a total volume of inversions in this segment of US$ 26.51 billion between 2010 and 2013. The crisis had devastating effects on the steel industry and there is still a lot of uncertainty. The increase in internal demand first reduces the export part and then leads to an increase in production, says Mr. Torres.

In infrastructure, the vector continues in the projects for generation of electricity, such as the hydroelectric power plants under construction in the North of the country. According to the National Bank for Economic and Social Development (BNDES), the Belo Monte unit alone, which is now awaiting a license for installation in the state of Pará, will be responsible for 10% of the estimated US$ 83.9 billion that the electricity segment will receive by 2014, which is 33.6% more than the volume invested between 2006 and 2009.

This sum also includes a total of US$ 5.78 billion for the Angra 3 nuclear power plant and the US$ 5.36 billion expected for wind energy, through recent auctions. In the study for between 2010 and 2013, the prospective projects for electrical energy did not get up to the level of US$ 60.24 billion.

With the slowing down of investments in telecommunications, logistics took second place in the ranking for investments in infrastructure. This industry will see a rise of 134.5% by 2014, compared with the volume invested between 2006 and 2009.

The main highlight here is the growth of 260% in the volume invested in seaports, which will add up to RUS$ 10.84 billion. In the case of railways, the expenses of US$ 9.94 billion incurred by the concessionaires, US$ 8.61 billion in plans to expand the network, and part of the bullet train project between Rio de Janeiro, São Paulo and Campinas, suggest a total investment figure of US$ 36.39 billion by the year 2014, which is an increase of 200%.

The size of logistics investments is not that large, but the rate of growth is encouraging, in the words of Fernando Puga, the Department Head of APE, who signs the study together with Gilberto Borça Jr., the Research Manager at the BNDES.