Annually, over 1.2 billion people travel on Brazil’s highways, and in the last two decades, government recognized that modern, well-maintained roads are key to sustained economic growth. To achieve this, officials made a commitment to accelerate the development of infrastructure to improve the country’s competitiveness, reimagining Brazil’s roads from one end of the country to the other.
Despite Brazil’s size and influence—it is the sixth largest economy in the world and is predicted to become the fourth largest by 2050—the country faces a substantial infrastructure gap that threatens to limit growth and competitiveness. This is especially true for the transport sector. Without a railroad network, and with many stretches of unpaved roads, trade costs inevitably increase. This poor transportation infrastructure ultimately prevents the country from reaping greater benefits from international trade.
To develop infrastructure that will allow Brazil to achieve its promise, the Brazilian Development Bank (BNDES), the Inter-American Development Bank (IDB), and IFC collaborated to create the Private Sector Participation Program (PSP Brazil) in 2008. The PSP Brazil alliance implements innovative public-private partnerships and fosters best practices through the provision of consulting services to regional and municipal governments.
The first PSP Brazil project, a groundbreaking concession to expand, rehabilitate, operate and maintain 667 kilometers of federal roads in the state of Bahia, closed in October 2009. It succeeded in introducing a new contractual structure that served as model for the development of other federal and state road transactions. In particular, this transaction—BR116/324—established the performance-based concession as a model for later federal and state road transactions.
The concession of the BA093 highway system, which closed in August 2010, was also precedent-setting. It became the first PPP to be structured for an entire highway system, the first to encompass an entire metropolitan area, and the first to adhere to the Equator Principles, guaranteeing that the project will be developed in an environmentally and socially sustainable manner.
Both of these transactions will improve economic resilience and encourage broader development throughout the region, including sought-after expansion in trade. Equally important, they will improve safety and access to basic services such as hospitals and schools for millions of Brazilians.
In the following interview, Henrique Amarante da Costa Pinto, BNDES’ Superintendent for Project Development, places these developments in context. BNDES is the main financing agent for development in Brazil, and since its founding in 1952, it has played a fundamental role in stimulating the expansion of industry and infrastructure in the country.