Page 77 - InvestmentGuideBrasilEng

form Brazil by the upgrade and construction of GROWTH ACCELERATION LOGISTICS INVESTMENT
These two far-sighted programs will trans-

new highways, railways, ports (both maritime PROGRAM (PAC) PROGRAM
and inland waterways), airports (international
and regional), oil & gas supply chains, agriculture
support infrastructure and electricity supply and Launched in 2007, the Growth Acceleration Pro- Brazil’s national Logistics Investment Program ? Building 10,000 kilometers of railway
distribution networks. gram, more commonly called the “PAC” after its was launched by the federal government in 2012 (greater than the distance between
By investing in the services sector, interna- acronym in Portuguese (Programa de Aceleracao and is aimed at providing Brazil with a modern, London and Tokyo). Stretches of track
tional businesses and investors stand to benefit de Crescimento), is a package of major public in- integrated and efficient transportation network, are to be auctioned to the private sector
from a strong pipeline of demand for assets and vestment in energy, logistics, social housing, san- strengthening the Brazilian economy’s competi- following a concessions contract model.
operations know-how across the whole infra- itation and urban mobility projects. tiveness by reducing logistics costs by at least 30%
structure spectrum. Driving demands are: During the first phase of the PAC between by the time the program reaches completion and ? Upgrading existing ports (both maritime
2007 and 2010, a total of $363.2 billion was in- laying the foundation for sustainable growth in and inland waterways) and creating new
? Increasing output from Brazil’s vested in infrastructure projects. The budget of Brazil over the next 50 years by beginning a con- ones. These have been opened up to private
agribusinesses and exports, with growth the program is approximately $530 billion for the tinuous process of planning and development of investment under a new regulatory framework.
of over 300% between 2002 and 2012, and second phase of the PAC, which runs between transportation and logistics infrastructure, led
total production of $242.6 billion in 2012. 2011 and 2014. Of this total, $260 billion will be by the newly created Logistics & Planning Corpo- ? Development of 270 regional airports
invested in power generation and transmission ration (Empresa de Logistica e Planejamento, or and aerodromes, including 5 international
? Major sporting events, such as the 2014 projects, $200 billion in social and urban projects EPL). This ambitious plan, which will raise invest- airports that are auctioned under concession
soccer World Cup and the 2016 Olympic (including urban mobility and housing) and $67 ment of over $250 billion, creates unprecedented contracts to the private sector.
Games, for which $22.9 billion is being billion in logistics. demand for new and upgraded infrastructure as-
invested in support infrastructure. Over the past 10 years, 1.1 million new houses sets in ports, railways, airports and highways. Concession contracts will be awarded for a
have been built and a further 1.4 million are under A defining characteristic of the Logistics In- term of 25 to 30 years, with financing spread over
? A growing population and burgeoning middle construction to accommodate Brazil’s surge in vestment Program is its openness to international 20 to 25 years at highly competitive interest rates
class that has expanded by 40 million and the middle class population. 43 new hydroelectric business. The program will auction contracts for and with a 3 to 5 year grace period for financing
requires urban mobility networks and efficient power plants, 61 wind farms, 30,000 kilometers the following infrastructure needs: from state-owned banks, which include the Bra-
inter-state ground transportation networks. of power lines and 12 new sports stadiums have zilian Development Bank (BNDES), Banco do Bra-
been built, with the latter preparing Brazil to host ? Widening and extending 7,500 kilometers of sil and Caixa Economica Federal.
? New industrial growth in traditionally the 2014 Soccer World Cup and the 2016 Olympic highways (equivalent to the distance between
rural regions of Brazil, particularly Games in Rio de Janeiro. New York and Moscow), with various stretches
the North and Northeast. The backbone of supplying demand in the do- of road to be auctioned to the private sector
mestic market and growing participation in inter- following a concessions contract model.
? Growing energy production in offshore national trade depends on logistics infrastructure,
and onshore oil and gas (including non- which is a growing business opportunity in Brazil
conventional blocks that will be auctioned in as a result of new investment in the sector. While
2013), biofuels, hydroelectricity, wind power most logistics operations have traditionally been
and other renewable sources, which are concentrated on the Southeast Region of Brazil,
propelling Brazil towards energy independence which accounts for a larger portion of national
and becoming a net energy exporter. GDP, government fiscal incentives, lower prices
Through both the PAC and the Logistics Invest- of real estate and expansion of land cultivated
ment Program, the Government of Brazil aims to for agriculture, together with strong economic
achieve a substantive leap forward in sharpening development in other regions of the country, are
Brazil’s competitive advantage by providing Brazil contributing to robust demand for logistics oper-
with an interconnected and modern transporta- ations in these areas.
tion network, upgraded logistics infrastructure
and efficient energy grid.
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