Brazil - Country Commercial Guide
Infrastructure

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-01-22

Overview

The Infrastructure sector is comprised of railways, ports, highways, airports, water, wastewater, sanitation, and solid waste. The Government of Brazil (GoB) will continue to support and promote business opportunities in infrastructure equipment, development and operations to potential partners and investors. Recent Ministry of Infrastructure (MINFRA) activities have included foreign virtual roadshows to showcase concession opportunities in railways, airports, highways, and ports. GoB interagency worked to make projects more attractive to foreign investors and legislators passed needed reforms to improve the investment environment in Brazil. 

As a result, Brazil returned to the Top 25 Ranking of Kearney’s Global FDI Confidence Index in 2020, which was conducted between January and March of 2020. While COVID-19 had not yet hit Brazil at the time of publication, Kearney’s partners in Brazil point to the positive sign that 35% of respondents were optimistic about Brazil’s recovery, versus 13% expressing a pessimistic view.  Pro-market actions, such as the Pension Fund reform and the privatization program, signal to investors that Brazil is well-positioned for long-term growth beyond economic and political turbulence.  The Investment Partnership Program (PPI) is the government body that evaluates and recommends infrastructure projects that will be included in the priority list of projects that will enter a bidding process for concession or privatization. PPI has published ten guidelines aiming to offer higher level of transparency and efficiency throughout the whole qualification process.

Total Portfolio of Projects for Action in Brazil
Total Portfolio of Projects for Action in Brazil

Source: Ministry of Infrastructure

Transportation

The Brazilian transportation sector can be segmented into cargo rail, passenger rail, logistics infrastructure, roads, ports, public transportation, urban mobility and smart transportation systems. According to the World Bank’s 2018-2019 Logistics Performance Index, Brazil ranks 56th out of 160 countries in the quality of its infrastructure.  Trucks are the primary method of cargo transport, which makes logistics more expensive and contributes to the “Custo Brasil”  concept that higher operational expenses are the cost of  doing business in Brazil.  Logistics costs account for around 12% of Brazil’s GDP (5% more than in the U.S.), reflecting an inefficiency that results from poor transportation infrastructure.

Opportunities

The Government of Brazil has been working to increase private investments in railways, especially for cargo, and has a portfolio of concessions in the pipeline over the next few years.  The “BR do Mar” (“Ocean Highway”) project, which was presented to Congress  in the first semester of 2020, will bring an incentive package for cabotage aimed at opening the market to increase supply, foster competition, lower costs and create new routes.   Another major project still under study and financial modeling by the Ministry of infrastructure (MINFRA) with the support of the Brazilian Development Bank (BNDES) is the privatization of the Port of Santos, the largest in Latin America.  Public auction is scheduled for the first semester of 2022, with the expectation that the entry of private sector players into port management will generate a greater flow of investments, bring more dynamism to port activity,  as well as modernize and improve service.

Total Portfolio of Projects for Action in Brazil
Total Portfolio of Projects for Action in Brazil; 2020-2022

​​Source: Ministry of Infrastructure

Resources:

·       Ministry of Infrastructure (MINFRA) - https://www.infraestrutura.gov.br/

·       Investment Partnership Program (PPI) - https://www.ppi.gov.br/

·       National Confederation of Transportation - https://www.cnt.org.br/

·       Brazilian Association of Infrastructure (ABDIB) - https://www.abdib.org.br/

·       National Agency of Land Transportation - https://www.antt.gov.br/

·       National Agency of Railway Operators - https://www.antf.org.br/

 

Water and Wastewater Subsector

 

The Internet of Things (IoT) is trending in Brazil’s water and wastewater market.  In 2018, Sabesp initiated a pilot project to test the IoT coverage in part of its networks, and given the positive results, in 2019, Sabesp contracted an IoT company to monitor water consumption.  Sabesp initiated installation of 100,000 smart water meters in its largest clients’ sites, whose consumption will be remotely measured.   Other examples of information technologies in the sector include the purchase of 2,000 on-line sensors by the Municipal Department of Water & Sewage of Rio Grande do Sul in 2018.  Some utilities already use telemetry, GIS for digital mapping and public works monitoring, among other technologies.

Among water supply projects, the Government of the Northeastern state of Ceará is expected to publish the request for bids for the construction and operation of a seawater desalination plant, which should benefit a population of 720,000 inhabitants in the metropolitan region of Fortaleza.  https://www.ceara.gov.br/2020/01/13/maior-usina-de-dessalinizacao-do-brasil-sera-construida-no-ceara/ 

Another relevant desalination program is Agua Doce, which is managed by the Regional Development Ministry.  As of 2019, 221 desalination systems were installed in remote areas of the semiarid region of Brazil, using reverse osmosis technology.  The membranes are imported into Brazil, whereas the equipment that houses the membranes are made in Brazil. https://mdr.gov.br

There is also high demand for retrofit and renovation of water and wastewater treatment plants in utilities all over Brazil. The “New Pinheiros” is a river clean-up project in the city of Sao Paulo, which demands onsite sewage treatment solutions.  The river pollution is mostly due to sewage disposal.  Several areas of the city are informally occupied and are not accessible to the traditional wastewater collection network, creating a major pollution problem.

Solid Waste Management

In the context of the Environmental Ministry “Zero Garbage Dump program”, the Ministries of Environment and Energy issued Ordinance 274/19 in May 2019, on Energy Recovery of Solid Waste, regulating the sector and providing the necessary legal security to attract private investors.  There is an increased interest in waste-to-energy technologies in Brazil, as some sanitary landfills are reaching full capacity. www.mma.gov

The program is also expected to stimulate the recycling market, as some of the actions included the signature of the sectoral agreement on lead acid batteries, which foresees collection and recycling of 16 million batteries and the recycling of 150,000 M.T. of lead per year. The sectoral agreement on electronics was also signed, increasing the number of voluntary delivery points of electronic waste from current 70 to 5,000 until 2025, which will enable recycling of 150,000 M.T. of electronics after 2025.  Finally, the expansion of lubricant oil reverse logistics will increase the amount of recyclable lubricant oil by 100 million liters by 2023. According to industry experts, there are business opportunities for operating the reverse logistics systems, which demand waste tracing technologies, as well as improvements in product manufacturing in line with the circular economy concept.

Figures from the Brazilian Association of Solid Waste Management companies (ABRELPE), abrelpe.org.br indicate that the amount of municipal solid waste generated in Brazil in 2018 was of 79 million M.T. of which about 60% were disposed in sanitary landfills.  Fifty-nine percent (59%) of the 5,570 municipalities in Brazil have sanitary landfills, whereas a large number of cities simply dispose the waste in garbage dumps.  An industry contact envisions business opportunities in transforming the numerous dumps into small sanitary landfills.  This activity would create a demand for small equipment, capable of processing about 100 Metric Tons of solid waste per day.  The Brazilian subsidiaries of Caterpillar and Komatsu are currently the leading suppliers of sanitary landfill equipment (crawler tractors, compactors, excavators, etc.), there is room for smaller equipment suppliers, provided they are capable of offering attractive financing terms and in-country aftersales services.

 

INDUSTRY CONTACTS:

·       Abrelpe – Brazilian Association of Private Solid Waste Management Companies – abrelpe.org.br

·       MMA - Brazilian Environmental Ministry – mma.gov.br

·       Regional Development Ministry – mdr.gov.br

·       Sabesp – Sao Paulo State Water and Wastewater Company – sabesp.com.br

·       AESabesp – Association of Engineers of Sapesp – www.aesabesp.org.br

 

TRADE EVENTS

Water and wastewater technologies

Fenasan – Annual International Water and Wastewater trade show and congress– www.fenasan.com.br

FITABES – Bi-annual International Water and Wastewater trade show and congress – abes-dn.org.br

Waste Expo Brasil – Annual International Solid Waste Management trade show and congress – www.wasteexpo.com.br

 

Airports

Since 2012, the government of Brazil has privatized 23 of the country’s busiest airports. The funds generated by auctioning these airports will be reinvested in the modernization of 50 regional airports. Brazil has recently concluded a round of airport concessions that signals exciting opportunities for U.S. Companies interested in participating in the expansion of the country’s system of airports.

While most of the large international airport concessions have already taken place, many opportunities, particularly in regional airport development are still available as Brazil works to privatize important regional airports. The Brazilian Civil Aviation Secretariat (SAC) predicts that the domestic segment will increase by 200% over the next 20 years from its current base of 107 million passengers per year. The airport concession program presents a remarkable opportunity for U.S. suppliers of airport products and services.

Despite the current challenges brought by COVID-19, Brazil plans to continue its privatization efforts via the public airport concession program. The next request for proposals for the project of transferring the 43 airports which are currently managed by the Brazilian Airport Infrastructure Company (Infraero) is scheduled for the first quarter of 2021. 

The forecast is to offer, in this sixth round, 22 airports grouped in three regional blocks. The South Block will include: Curitiba airports; Foz do Iguacu (PR); Londrina (PR); Bacacheri (PR); Navegantes (SC); Joinville (SC); Pelotas(RS); Uruguaiana (RS) and Bage (RS). The Central Block will include: airports in Goiania; Palmas (TO); Teresina (PI); Petrolina (PE); Sao Luis (MA) and Imperatriz (MA). The Northern Block will include: Manaus Airports; Tabatinga (AM); Tefe (AM); Rio Branco and Cruzeiro do Sul (AC); Porto Velho and Boa Vista. According to the National Civil Aviation Agency (ANAC), before the crisis caused by the pandemic, these terminals accounted for the movement of 11% of domestic air transport users.

The Brazilian government launched a regional aviation development plan at the end of 2012. At the time, the initial plan called for investments in about 800 small and medium airports but ended up being reduced to 53 regional airports and heliports. The new plan will require R$2.4 billion in investments in these 53 airports over the next decade with funding from the National Civil Aviation Fund.

During the pandemic, the government of São Paulo has opened a public hearing for the concession of 22 regional airports in the country’s most populous state. The public hearing was held on May 21, but no dates for auctions were announced. The total estimated capital expenditures for the airports during the 30-year concession period are approximately US$ 100 million. Despite the big crisis facing the airline industry due to the coronavirus, experts see appetite from investors for regional airports. After the end of this health crisis, it is expected the public will tend to opt for short-range trips or travel by private jets, which are served by regional airports. Thus boosting demand for these airports.

Opportunities

As a result of Brazil’s airport privatization program, airport infrastructure presents significant business opportunities for U.S. companies as the winners of airport concessions upgrade existing infrastructure. In addition to design and consultancy services, opportunities exist in areas such as passenger bridges, docking systems, baggage handling systems, handling equipment, check-in conveyors, x-ray integration, baggage claim carousels, x-ray machines and other safety and security equipment.

 

Companies with know-how in the areas of airport management and operations are welcome to establish partnerships with local Brazilian companies and are encouraged to participate in future privatization auctions. To succeed in Brazil, U.S. companies must either be established in the country or have a well-informed local representative. Much like in other sectors in Brazil, it is important to have a distributor or system integrator that can offer post-sale and maintenance services, replacement parts, and repairs. Whether introducing a product to the market independently or entering with an existing local partner, it is necessary to have a coherent market entry strategy to penetrate the Brazilian airport industry.

 

Industry Contacts

SAC – Civil Aviation Secretariat – www.aviacao.gov.br

ANAC – Brazilian Civil Aviation Agency – www.anac.gov.br

ANEAA - Brazilian Association of Private Airports Concessionaires - www.anea.com.br

ABAG – Brazilian Association of General Aviation – www.abag.org.br

ABEAR – Brazilian Airlines Association – www.abear.com.br

IBA – Brazilian Aviation Institute – www.institutoaviacao.org

 

TRADE EVENTS

LABACE - Latin America General Aviation Show - http://www.labace.com.br/en/labace-svd2021-en/

AirConnected - Airport - https://www.airconnected.com.br/