Concession of transport infrastructure: the Brazilian case

The present paper presents a critical analysis of the recent concession policies undertaken to foster transport infrastructure investment in Brazil. As fiscal restrictions have increased in severity, public infrastructure investment has dwindled below the levels necessary to maintain the existing network, not to mention below the levels required to develop and expand it at the required rate for the modernization of the economy. Consequently, private investment has become an attractive, and indeed, mandatory option. This paper analyses the concession and partnership policies and contracts implemented in Brazil and highlights the limitations of this option, leading to a discussion on possible alternatives to overcome the funding gap. The paper reveals that the loss of capacity for the planning, design, and management of complex contracts has led to the government's growing dependence on the private sector, whereby contracts are designed and performed according to the financial interests at the expense of public ones. By analyzing the issues of transport funding, the paper addresses a circularity problem: regional growth requires infrastructure investment, the viability of which depends on regional growth. As a response to the described shortfalls in transport infrastructure investment, the paper concludes by proposing an innovative institutional framework that foresees a more integrative planning and investment programme in infrastructure, industry, and public services. However, the implementation of this type of programme requires institutional innovations with respect to contracting out to the private sector.