January 21, 2019 / 10:07 PM / a month ago

UPDATE 1-Brazil to privatize more airports, railways for grains

(Adds comment on Chinese investment, airport and rail details)

By Anthony Boadle and Jake Spring

BRASILIA, Jan 21 (Reuters) - Brazil’s government will announce the privatization of southern airports, including Curitiba, in the second quarter of this year, according to Adalberto Vasconcelos, head of the PPI government program tasked with luring private investment in the country’s infrastructure.

Vasconcelos told Reuters on Monday that the Ferrograo and FIOL railway projects serving the central grain belt would be ready for bidding this year or early in 2020. Miner Vale S.A. and logistics company Rumo S.A. are also expected to sign early renewal of rail concessions this year, involving a commitment to new investments, he said.

Chinese investment would be “very well received” in Brazilian infrastructure projects, Vasconcelos said.

Brazil’s new right-wing President Jair Bolsonaro criticized China for “buying up” Brazil during the election campaign last year. But Vasconcelos clarified that he was referring to strategic assets and “means of production” such as farm land.

Bolsonaro, who took office three weeks ago, is boosting the Investment Partnerships Program started in 2016 by the previous government to speed up improvements in deficient infrastructure that adds to the cost of exporting Brazilian soy and other food.

To improve air travel across the vast country for tourism, farming and the oil industry, 20 airports will be auctioned on March 15 as planned in three regional blocs.

Vasconcelos said one or two more blocs of airport concessions will be announced after March, including Curitiba, but not the coveted busy airport of Congonhas in Sao Paulo and Santos Dumont in Rio de Janeiro. These will not be on the auction block for now because they are key to funding Infraero, the government agency that manages airports.

The government plans to reduce Brazil’s heavy reliance on road transport for moving cargo to markets and ports by building more railways and getting current operators to invests in expansions as they sign renewal of their concessions.

By 2025, it hopes to double the share of cargo moved by rail to 31 percent from 15 percent, Vasconcelos said.

Vale, the world’s second largest mining company and top iron ore exporter, and Rumo have already agreed and their contracts only need approval by the federal audits court TCU, he said.

The Ferrograo grain railway will take 10 years to build, he said, and run from Sinop in Mato Grosso state to Miritituba on the Tapajós river from where barges will carry crops for transshipment on the Amazon and out to world markets.

The FICO and FIOL railways will connect the farm belt to the North-South line and Atlantic ports, with a capacity to move out 8 million tonnes of grains a year.

Control of Brazil’s largest utility Eletrobras will pass into the hands of private investors via a huge new share sale under a previously announced model, after separating two strategic subsidiaries, nuclear power generation unit Eletronuclear and the massive Itaipú Binacional, which straddles the Brazil-Paraguay border.

The PPI program run by Vasconcelos will be responsible for handling concessions and privatizations of state companies, though the sale of their assets or subsidiaries will be handled by the divestment office at the Ministry of Economy. (Reporting by Anthony Boadle, Jake Spring and Brad Haynes Editing by Leslie Adler)

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