Announcement of the Cup cities starts race for private investors
Valor Econômico
The announcement of the 12 Brazilian cities that will hold the 2014 World Cup made yesterday by the International Federation of Soccer (Fifa), in the Bahamas, allowed the state governments and private investors to start negotiating the infrastructure works required so that the chosen cities can receive the World Cup games. 12 out of the list of 17 municipalities were chosen. They are Rio de Janeiro, São Paulo, Belo Horizonte, Porto Alegre, Curitiba, Brasília, Cuiabá, Manaus, Fortaleza, Salvador, Recife, Natal. Campo Grande, Belém, Rio Branco and Florianópolis were eliminated.
The potential of the business related to the infrastructure of the Cup reaches billions of dollars. The figures vary according to the source, but the highest estimates point to R$ 30 billion (US$ 14.3 billion), R$ 6 billion (US$ 2.9 billion) of which only in construction and improvement of stadiums. The Federal Government should release money for projects involving urban transport, roads, railroads and airports.
In the case of the arenas, the plan is to let the works under the responsibility of the local governments in association with the private investors. But that is the main doubt: with projects that get to R$ 500 million (US$ 238.1 million) to build new stadiums or remodel the existing ones, and considering the financial risk these projects normally offer, will the private initiative take part in the venture?
This geography of the investment should determine, to a great extent, the percentage of participation of the government and of the Public-Private Partnerships (PPPs) that, as it seems, will be the format chosen to implement the works. "In the municipalities where there is less commercial interest there should be a greater public participation", says Luiz Fernando Santos Reis, president of the National Association of Heavy Construction (Sinicom).