SECTORS
SANITATION
Water and sewage
According to the World Bank, Brazil has low rates of basic sanitation when compared to other countries. In water supply, it occupies the 100th place in the World Ranking, and 132nd in sewage treatment. In order to transform this scenario, the National Plan of Basic Sanitation of the Ministry of Environment estimates that more than BRL 300 billion in investments in sanitation projects in the Country is necessary for the next 20 years. However, the private sector accounts for about 7% of operations and approximately 20% of total sanitation investments in recent years.
Solid Waste
Currently there are still 3,000 dumps in operation in about 1600 Brazilian cities, according to the Brazilian Association of Public Cleaning and Special Waste Companies (Abrelpe), which shows a demand for private investments in this segment. The National Policy on Solid Waste determined the closure of all dumps in Brazil by 2014, a deadline that was not met. Nowadays, 90% of the country’s municipalities have garbage collection, but only 59% use proper landfills for waste disposal, according to Abrelpe.
Drainage
Federal Basic Sanitation Law (Law 11.445/07) defines Urban Rainwater Drainage and Management as the set of activities, infrastructure and operational facilities for urban rainwater drainage, transportation, detention or retention for flood flow damping, treatment and final disposal of rainwater drained in urban areas. Due to the difficulty of charging models for drainage services, it is not common to contract Concessions and PPPs for urban drainage management. However, projects in this segment are recurrent among municipal managers that aim to meet the demand for sanitation infrastructure of the population.
ENERGY
Energy
The Brazilian electricity matrix is currently divided into hydroelectric (64%), thermal (26%), wind (8%), nuclear (1%), and solar (1%), according to Aneel. By 2027, Brazil will invest more than BRL 2 trillion in power generation with a growing trend for renewable energy sources. Investments can represent an initial savings of 14% on electricity costs. Moreover, Brazil already has partnerships with the private sector that cover, besides renewable and non-renewable energy, sectors such as electricity transmission and distribution.
TRANSPORT
Ports
Responsible for most of the import and export of products in the country, the port sector grows its share in the economy every year. With the new Port Law (Law 12.815/13), approved in 2013, and being considered a priority sector for investments within the government, a continuous expansion of the Brazilian port sector is expected in the coming years, mainly driven by private investments and concessions from different spheres of government.
Airports
Responsible for national and international transit of people and cargo in the country, the airport sector has experienced a significant growth in recent years, when the number of passengers more than tripled throughout Brazil, according to the Civil Aviation Secretariat. Federal airport concessions were largely responsible for this growth. In the coming years, 3 more airport concession rounds are planned, covering 22 terminals from different regions.
Urban Mobility
It is considered as one of the main challenges of public managers, urban mobility is in great demand for projects at the federal, state and municipal spheres. With the National Urban Mobility Policy (Law No. 12.587/2012) which aims to favor non-motorized transport and public transportation, the sector points out to the need for more than BRL 200 billion in investments to meet the demands, according to BNDES. Nowadays, the major urban mobility projects will be carried out in Subways, VLTs, Monorails and BRTs, aiming to increase the population's quality of life by cooperating with the circulation and broad and democratic access to urban space, faster, more efficiently and ecologically sustainable.
Roads
The improvement of the Brazilian highway network is one of the biggest challenges that the Brazilian State faces to reduce the country’s logistics cost. The road matrix accounts for 61% of the transportation of national goods production and, currently, only 12% of the more than 1.7 million kilometers of highways are paved, according to the National Transportation Confederation. For the coming years, Federal Government highway auctions should correspond to approximately BRL 140 billion in investments.
Railway
The rail modal is characterized by transporting large amounts of cargo at low cost over long distances. Despite the characteristics of the modal and the continental dimensions of Brazil, the railway sector accounts for only 21% of all national production of goods. The sector is also treated as a priority by the Government to unlock logistical bottlenecks and reduce transportation costs. With this scenario, the outlook is for significant private investments planned for the coming years.
SOCIAL INFRASTRUCTURE
Health
In Brazil, 64% of hospitals and emergency rooms are overcrowded, and 73% of medical units do not have the proper structure, according to the Federal Court of Accounts. Before this demand, PPP contracts which have already entered into for health with the private sector are successful cases, ranging from the construction of Basic Health Units to High Complexity Hospitals in various spheres of government.
Education
One third of children up to 3 years old in Brazil are out of school due to lack of nursery places, according to IBGE. Moreover, only 0.6% of Brazilian schools have infrastructure close to ideal for teaching, according to a report by UnB/UFSC. The current scenario demands projects and new investments throughout the country. Nowadays, school PPPs include the construction of infrastructure and the operation of teaching units. This model allows the public sector to focus strictly on pedagogical activities.
Housing
The deficit for this sector in Brazil represents about 5.4 million homes, according to IBGE. The estimated investment to reverse this scenario is BRL 760 billion by 2024. Making social housing projects viable via PPP represents a strategic solution for states and municipalities in terms of cost, agility and long-term quality. Moreover, the promotion of mixed-use occupations, which are both used for commerce and residence, enables the capture of income from other business activities for housing subsidies, thus benefiting the public sector.
Penitentiary
According to data from the National Justice Council, Brazil has more than 800,000 prisoners, which aggravates the overcrowding of prisons and the shortage of places in the penitentiary system. With state concessions projects and changes in the regulatory framework, public-private partnership projects for prisons tend to increase across the country. Nowadays, the model of contract usually proposed consists of the construction and maintenance by the private partner and the shared operation with the government.
Citizen Service
With various contracts with local and state governments, citizen service projects cover public services that rely on related infrastructure, such as multiservice centers (request for documents and information), bus terminals, popular business centers, among others.
Arenas
The multiuse or multipurpose arenas are facilities capable of hosting the most diverse sporting and large entertainment events that take place in the country, such as cultural shows, concerts, sports presentations, trade exhibitions, seminars, congresses, rodeos, motocross, among others. This sector was highlighted due to the renewal and new arenas for the 2014 Brazil World Cup. Nowadays, public-private partnerships aim to avoid public spending for this sector and to modernize old sports structures.
Public Lighting
Since 2015, street lighting has become a municipal responsibility, according to Aneel Resolution 414/2010. With numerous projects in different municipalities, the Brazilian public lighting has a pulverized structure and demand BRL 27 billion in investments across the country, according to the World Bank. Moreover, only the exchange of traditional light bulbs with LED lamps, thereby, fostering the reduction in electricity costs, has a potential for investments of BRL 40 billion. The investment demand scenario for this sector shows that public-private concessions and partnerships are an efficient solution for public lighting in Brazilian cities.
PRIVATE INVESTMENT
Investment in Industry, Export and Internationalization
Private investments aim to generate monetary returns for their investors through a private-private relationship. In the export sector, high growth and business development provide opportunities to capture mainly in developing countries. BF Capital provides customized solutions during project development through business plan preparation, financial strategy definition, economic-financial viability analysis, definition of the capital structure, project debt capacity and structured financing, risk mitigating, market analysis and fund raising (via Debt or Equity).
OIL AND GAS
Oil and Gas
With demands to modernize the industry and improve the logistics, transportation and distribution of oil and oil products throughout the country, the Oil and Gas sector needs public sector and private sector investment. For the coming years, the expectation is for a new investment cycle, with auctions for oil and natural gas exploration areas.