Anyone entering a car, truck, or bus and driving on the Brazilian highways knows that, save on rare occasions, he is going to find holes, detours, shoulders covered in overgrowth, and bad signing, among other problems.
This not only reduces the speed of transport, irritates people, and puts drivers at risk, but also affects domestic production, as 63% of all cargo in the country is transported on highways.
Brazil has almost 1.725 million kilometers of highways, but only 165,000 kilometers are paved. Of the total, 72,000 kilometers are federal highways, being 58,000 kilometers paved.
According to Luiz Fernando Santos Reis, president of the National Union of Heavy Construction Industries (Sinicon), more than 80% of the paved highway system is in bad or awful conditions (the government says 35% is in "regular" state and 47% in "awful" conditions).
According to forecasts by the National Confederation of Transport (CNT), investment of over US$ 3 billion would be necessary for "recovery of our most important highways."
Santos Reis goes even further, stating that the country must invest almost US$ 4 billion by 2010 in the recovery of over 43,000 kilometers of federal highways and in constructions on the highway system, not to mention work on duplication and expansion of the highways.
"The picture is chaotic, not only is the total of paved federal highways relatively small, but a large part is also degraded due to lack of maintenance," he stated.
The CNT technical team agrees with Santos Reis' opinion and evaluates that the density of the highway system is low, 17.3 kilometers of highways per square kilometer of area.
"And it is no longer any use simply to fill in holes, it is not enough," added Santos Reis.
According to him, a paved highway lasts an average of around 10 years, whereas in Brazil there are highways that have had no maintenance for 20 or 30 years.
A hole in the tarmac is only part of the problem, with traffic and with rainwater infiltration, the "base" and "sub-base" of the highway are affected.
"It is like a house that deteriorates if you do not paint it with waterproof paint," he stated.
Up to the moment, Transportation minister Alfredo Nascimento has announced that the government is going to invest around US$ 650 million in the recovery of 25% of the degraded highway system up to next year.
The project has been approved by President Luiz Inácio Lula da Silva, but the origin of the funds has not yet been detailed, neither has it been specified when they will be made available.
The fact is that the Ministry budget for this year is just under US$ 650 million for investment, mainly in highways.
However, according to Santos Reis, the government already owes around US$ 200 million to sector companies for work executed between 2002 and 2003, and over US$ 50 million for the years of 2000 and 2001.
And according to both Santos Reis and to CNT technicians, work in highway recuperation and conservation must only use public funds.
"The ministry program is correct, but in this case (recuperation of 25% of the highway system) only public funds can be used. You have to go and ask (Finance Minister) Palocci to make the funds available," stated Santos Reis, ironically.
One of the possible sources of funds is the fuel tax (Cide). Representatives from transport and heavy construction sectors are complaining that the federal government is withholding funds collected with the tax so as to help balance federal expenditure, whereas investment should be made in infrastructure.
According to the CNT, the Cide should generate around US$ 2.5 billion this year.
"This year the government will collect sufficient funds to revert this picture and return to investing in expansion, not just of the highway system, but also of the railway system and in better equipment for ports," say confederation technicians.
The CNT doesn't yet have a calculation of how much the precarious state of highways affects the value of freight.
"However, we may clearly state that the rhythm of economic growth in the country, especially in the less developed regions and in agricultural areas in the Midwest and North, is seriously affected by lack of investment in maintenance and expansion of the means of transport," informed the organization technical team to ANBA.
But it is not only the Midwest and Northeast that suffers losses. According to the CNT, the production flow problems in the South cause annual losses of over US$ 900 million.
Apart from that, Brazilian highways are bad, "covered in holes and wavy tarmac," vehicles travel at an average 23 kilometers per hour lower speed than they do on highways in good conditions.
"Apart from that, vehicle maintenance is more necessary, and there is greater fuel consumption. All these factors generate cost for the companies, increasing freight cost," evaluated a CNT technical coordinator.
According to a World Bank study about infrastructure in Brazil, the precarious conditions of the highway system annually cause vehicle users maintenance expenses three times greater than the necessary investment in highway recuperation.
According to an article by newspaper O Globo, in May, the delay in making funds available for highway recovery has already reduced the possible flow of the agricultural harvest this year.
The paper stated that the government itself and the private sector forecast that between 10% and 12% of the grain harvest, or around 12 million tons, is lost.
Agriculture minister Roberto Rodrigues has already thrown in the towel. "There is no more time. Investment will only benefit the harvest next year. Losses in this harvest are irreplaceable," he stated, according to the newspaper.
"Transport would not be possible even if we started a serious highway recovery program today. We would be like the thief who steals and cannot carry the load," added the president of the National Association of Cargo Transports (NTC), Geraldo Vianna.
Vianna and other sector representatives believe that Brazil is on the verge of a "logistics blackout."
"If industry grows a little, it will also not be able to transport produce. When infrastructure is disproportionate to the country productive capacity, it slows it down," he stated.
In the evaluation of CNT technicians, Brazil may suffer a "halt" with "direct consequences to inflation and foreign trade."
Last year the need for good quality highways for harvest transport made the National Food Supply Company (Conab) study Brazilian those important to agriculture, such as the BR 163, which connects the city of Santarém, in the state of Pará, to the north of the southern state of Rio Grande do Sul "with some interruptions."
"Highway BR 163 is one of the highways that most needs recuperation, and it would bring the greatest return in terms of harvest flow for export and for the domestic market, especially soy, maize, and cotton," says the study.
Also known as "Soy Highway", BR 163 crosses the midwestern states of Mato Grosso and Mato Grosso do Sul, and the southern state of Paraná, all large agricultural producers, and it is, in the evaluation of Conab technicians, the best alternative for the produce to reach the port of Paranaguá (in Paraná).
"The conditions of highways throughout the country are bad, but, undoubtedly, the worst conditions are in the North and Northeast," added the CNT technical coordination.
Last year, the Sinicon presented the federal government with a study of how much investment would be necessary up to 2010 for highway recovery and maintenance.
The almost US$ 4 billion, mentioned above were divided as follows: US$ 1.456 billion investment in recuperation, and another US$ 592 million in conservation between 2003 and 2006; and investment of US$ 1.291 billion in recuperation, plus another US$ 658 million in conservation between 2007 and 2010.
"This would be enough to leave the highways in perfect conditions," stated Santos Reis.
In the case of total or partial duplication of highways considered priorities, necessary investment, according to the Sinicon, would be around US$ 2.7 billion between 2003 and 2006 and another US$ 2.7 billion between 2007 and 2010.
Among the initiatives considered priorities by the government, with regard to expansion of the infrastructure, is the duplication of federal highway BR-101 between the cities of Florianópolis (capital of the southeaster state of Santa Catarina) and Osório (in the southern state of Rio Grande do Sul) and between Natal (capital of the northeastern state of Rio Grande do Norte) and Feira de Santana (in the northeastern state of Bahia).
Apart from that, the government has established the construction of a series of highways as priorities.
In the evaluation of Santos Reis, however, the construction of new highways cannot be discussed before those existing are restored.
"If that happens, assets that do not belong to the government, but to the Brazilian people, will be lost. Until it has conditions to do so, the government should not begin new highways, otherwise it will leave a series of unfinished constructions," he stated.
According to the World Bank study about infrastructure, the Brazilian federal highways are worth around US$ 10 billion.
The investment plan presented to President Lula by the Transportation Minister shows that investment necessary to "change the characteristics of Brazilian infrastructure in four years" would be around US$ 10.1 billion, being almost US$ 2.1 billion in highway recovery and maintenance, US$ 7 billion in infrastructure expansion and around US$ 1.1 billion in "other activities" (improvement of highways, ports, and waterways).
Of this total, the federal government would be responsible for around US$ 4 billion, or less than half. That is, to reach the target desired, foreign and private investment would be necessary.
Nowadays, according to information by the National Agency for Overland Transport (ANTT), just 1,680.1 kilometers of federal highways operate under concessions to private companies, and they are considered good quality, as is the case with Dutra highway (BR-116), in its stretch between the southeastern cities of São Paulo and Rio de Janeiro.
Tenders for concession of another seven stretches in six states, totalling around 2,610.2 kilometers are being prepared.
These processes should have been completed by now, but they were interrupted in 2002.
This year the federal government returned to considering privatization plans, through an accord with São Paulo Stock Exchange (Bovespa).
"Private companies are prepared and interested in participating," guaranteed Santos Reis.
However, not all highways can be concessions, as some of them do not have sufficient flow to provide the administrator with toll revenues.
In these cases, the government is betting on public-private partnerships (PPP's), which have not yet been approved by the Congress. But similar projects have already been approved by the Legislative Assemblies of the southeastern states of São Paulo and Minas Gerais.
"Although the main focus is on public-private partnerships, the area is still not so attractive to other players, the private sector and foreign investment, due to the large investment in construction of infrastructure, to the current bad conditions of the system, and to the lack of a regulator. Apart from that, the PPP's are long term projects, and Brazil needs immediate measures," evaluate CNT technicians.
Despite the delay in establishment of a regulator for the PPP's - where private companies invest in exchange for assets or financial guarantees of payment in case the state goes default -, Santos Reis stated that there are companies in the heavy construction system, although not all, interested in the system.
"One of the reasons is that the companies do not have many options if they want to stay in the business. If they do not study alternatives, they are dead," he stated.
Personally, Santos Reis believes that the PPP's are one way out for the sector.
For them to work, though, "it is fundamental" that the government be "credible".
There must also be a "consistent regulator," and business management must also be trustworthy.
In his opinion, the system should be administered by the Brazilian Development Bank (BNDES).
Changes in the Matrix
More than investing in highways, it is necessary to rethink the transport matrix.
The consensus among specialists is that the system is unbalanced, with 63% of domestic cargo being transported on highways, 24% on railways, and just 13% by water.
"In the case of Brazil it is very clear that the current configuration should be altered to generate more satisfactory economic results, as the highway system is also being used for long distance transport, a system in which other means would be more appropriate," evaluates the CNT technical coordination.
According to Santos Reis, it would be ideal if highway transport were used only for short distances, railway transport for medium distances, and waterways (rivers and ports) for long distances.
In the short term, construction of a railway is more expensive than a highway. However, in the long run, transport is cheaper, as a train can carry much larger loads than a truck.
According to Bernardo Figueiredo, director of Valec, a state-owned company that administers the North-South Railway, railway transport cost can be up to 30% cheaper than highway transport.
Santos Reis added, however, that the planning of a new transport matrix should not "start from scratch," abandoning the existing system, but the system should be modified slowly, minimizing the existing problems.
This report is part of a series of articles on transport in Brazil prepared by ANBA – Brazil-Arab News Agency - www.anba.com.br