Projects amounting to R$116bn drag on in the Northeast

Before passing on the presidency, Luiz Inácio Lula da Silva wanted to have slid along the rails of Nova Transnordestina train track. He also intended that the oil refinery Abreu e Lima be working, the São Francisco River be diverted, and the BR-101 highway between Alagoas and Rio Grande do Norte be doubled. He was unable to inaugurate any of the above projects, but he announced them pompously, along with other investments in the Northeast, which helped to elevate his already significant prestige in the region, helping to elect his successor. If the rate at which these projects are going is considered, however, there is a risk that current President Dilma Rousseff may not even be able to inaugurate them herself.

A study by Valor regarding the main ventures announced for the Northeast of Brazil in the Lula administration – which total over R$116 billion in investments – points to an average execution delay of three and a half years. This excludes projects which, due to their complexity, have no forecast completion date. The lethargy, naturally, is due to costs, which have risen a lot. Poorly carried out agreements and contracts, environmental questioning and accountability irregularities, according to specialists, must be avoided in future projects, such as the announced new roadway and railway concessions package.

The news that Petrobras put the refineries he promised for the state of Maranhão (Premium I) and Ceará (Premium II) on the back burner caused a frenzy in the Northeast. Their budget was nearly R$60 billion. In January 2010, the former president buried a box in the municipality of Bacabeira, 58 kilometers of São Luís, in the state of Maranhão, filled with objects having to do with the enterprise, in a ceremony in which Ms. Rousseff, then minister, participated. The box, considered by the Maranhão press as an unfortunate trunk, was expected to only be dug up on the day the refinery was inaugurated, originally projected for September, 2013.

The unit will produce high-quality diesel and offshoots like jet fuel, naphtha, liquefied gas and coke, with capacity to refine 600,000 barrels per day. The venture, however, was placed “under evaluation” in Petrobras’ investment plans for the period between 2012 and 2016. The state-owned oil giant alleges that it will seek “international alignment” for the refineries, which are scrutinized by segment specialists due to costs, location and relevance.

Announced by Lula in December 2010, in the municipality of São Gonçalo do Amarante, in the metro region of Ceará’s capital, Fortaleza, Premium II has also been postponed. The plant, initially expected to enter operation in 2014, no longer has a date to begin operations. The postponement irritated governor Cid Gomes, who even called Lula. Later, he received from Petrobras CEO Maria das Graças Foster the guarantee that the enterprise will be carried out. Mr. Gomes is currently in South Korea seeking a technological partner for the unit.

Refinery Abreu e Lima, after a long history of problems, is underway but dragging its feet on the southern coast of the state of Pernambuco. The unit’s history is composed of questioning by the Federal Audit Court, TCU, successive strikes, and uncertainty regarding partnership with Venezuela’s PDVSA, and its cost leaped from $2.3 billion to over $17 billion. The start of operations was forecast for November 2014. In February, 2008, the first balance of the Growth Acceleration Program (PAC) projected the beginning of operations for December 2010. 

Those who defend the new refineries in the Northeast considers them essential to include the region in the oil and gas productive chain, which should condense most industrial investments over the next few years, starting from the beginning of pre-salt exploration. According to economist Tânia Bacelar, from the Federal University of Pernambuco, or UFPE, the Northeast runs the risk of being left behind in the national economy if it stays out of this sector.

It’s no different with infrastructure. Both railways expected for the Northeast are also very late and have no conclusion date. Nova Transnordestina, 1,728 kilometers long, has gone through an exchange of contractors, delays in resources by the Federal Government and a traumatic dispossession process. After these hurdles were surpassed, the project is now on the stretch that cuts the states of Pernambuco and Piauí, expected to be ready in December 2014. The Ceará stretch, however, is still stuck and without positive perspectives. Currently, concessionaire TLSA is arguing about new prices and deadlines with the Federal Government.

Even so, the last PAC balance points to the Transnordestina’s progress as “adequate,” much different than the “worrisome” appraisal of the West-East Railway, known as Fiol, slated to cut Bahia from the municipality of Ilhéus to Figueirópolis, in the state of Tocantins. The railroad’s main goal – with a budget of R$3.5 billion – is to make the exploration of iron ore feasible in western Bahia, but the project has been mired in difficulty. Of the 1,500 km expected to be built, only one-third is underway, and slowly at that.

The railway had its license suspended by Brazil’s environmental agency, Ibama, in 2011, due to a number of issues that were not being followed through by the responsible firm, state-owned company Valec. The goal now is to get the 500 km stretch that ties the cities of Caetité and Barreiras, both in the state of Bahia, going. Along with not having an installation license, the stretch had works suspended by the TCU. One of the most interested parties in seeing the Fiol project underway, José Francisco Viveiros, the CEO of Bahia Mineração, known as Bamin, says the delay is frustrating the company’s mine exploration plan and is causing losses as a consequence.

When it is able to be transported, which will not be before 2015, ore from the interior of Bahia will be exported via Porto Sul, another large out-of-service project in the Northeast. The environmental impact generated an interminable battle of interests. The port is divided in two areas: one for Bamin’s private use and a public port, which may be part of the new concession system drawn out by the Federal Government. According to Bahia’s government, construction will last at least five years, starting when the installation license is granted, which it has not yet been.

To Paulo Godoy, president of the Brazilian Association of Infrastructure and Base Industries, Abdib, it is essential to improve planning and quality of these projects before work is begun on them. He says it is also important that legislation be “revisited,” in order to lend more security and predictability to the ventures. Losses with such large delays on large-scale projects, he says, are “astronomical.”

A good example of poor planning is the São Francisco River’s water diversion project, in which part of the works were contracted based only on the basic project, originating various additional requests by contractors. As a result, the project’s cost has already surged over 40% to R$6.8 billion, while the conclusion deadline – initially estimated at December 2010 – is yet undefined. The east axis, the most advanced so far, is only 55% executed and should only be inaugurated at the end of 2015.

Doubling and modifying federal highway BR-101, which runs along most of the Northeast coast, is considered essential for improving tourism. The project is delayed, however. According to PAC’s first balance, the initial goal was to finish the 410 km stretch between Rio Grande do Norte and Alagoas by December 2010. Only 30% of the work is done, even though 75% of the funds for the projects were used up by 2010. The cost has also grown significantly, from R$1.4 billion to R$2.5 billion.

Source: Valor International.

Sales of Pork Beef to Russia Increased 327.5 Per Cent in August

BRAZIL – Sales of beef and pork in August increased 14.9 per cent and 9.3 per cent, respectively, compared to the same month last year and saw a 97 per cent increase in exports of these products to Russia, acquiring $126.7 million.

For the export of pork to Russia, the expansion of value was 327.5 per cent.

Exports from Brazil in August of the two meats totaled $658 million. The increases were 28.7 per cent for beef and 17.6 per cent for pork.

In August this year, Russia imported $88.6 million (21,800 tons) of beef, up 62 per cent from August 2011.

Iran is the second largest buyer of beef ($67 million and 14.3 thousand tons), followed by Hong Kong ($60.7 million and 17.4 thousand tons), Egypt ($57.2 and 14.8 million tons) and Chile ($41.6 million and 7.4 thousand tons).

As for pork, sales to Russia were 327.5 per cent compared to net sales and 387 per cent compared to net sales and 387 per cent compared to the volume of the same month last year ($38 million and 14 200 t).

Ukraine followed second ($28 million and 11 600 t), Hong Kong third ($24.5 million and 10.3 thousand tons).

Information provided by the Secretariat of Agribusiness International Relations, Ministry of Agriculture, Livestock and Supply (MAPA), data from the Ministry of Development, Industry and Foreign Trade (MDIC).


Source: ThePigSite News Desk

Brazil releases World Cup 2014 mascot

RIO DE JANEIRO – Spain had Naranjito the smiling orange in 1982, France Footix the football playing rooster in ’98, now Brazil have chosen an endangered armadillo as the mascot for the 2014 World Cup.

FIFA said the mascot, unveiled by former Brazil striker Ronaldo during a television programme late on Sunday, represented the three-banded armadillo, an endangered species indigenous to Brazil.

While nature’s version is light brown in colour, FIFA’s mascot is yellow with green eyes and a blue shell, the colours of the Brazilian flag, and will be holding aloft a football.

Other mascots over the years include ‘Zakumi’ the leopard from South Africa 2010, ‘Pique’ the chillipepper from Mexico 1986, and a lion named ‘World Cup Willie’ from England in 1966.

“The mascot will play a key ambassadorial role in the next two years”, said Ronaldo, who played in three World Cups and was an unused squad member in 1994, on Brazilian television.

“I’m sure he will inspire many young football fans in Brazil and all over the world with the great passion which he has for the sport and for his country.”

Three-banded armadillos live mainly in Brazil’s arid northeast and are threatened by habit destruction. They are unusual among armadillos in that they can roll up into a ball to defend themselves from predators.

“The fact that the three-banded armadillo is a vulnerable species is very fitting”, said FIFA Secretary General Jerome Valcke.

“One of the key objectives through the 2014 World Cup is to use the event as a platform to communicate the importance of the environment and ecology.

“We are glad to be able to do so with the help of a marcot who I’m sure will be much-loved, not only in Brazil, but all over the world”.

FIFA said a vote would be held to choose the mascot’s name.

“The mascot is one of the key visuals of a FIFA World Cup, providing FIFA, the LOC (local organising committee) and other stakeholders with a strong and exciting brand asset through whichi promotional campaigns can be activated and target audiences can be engaged”, added FIFA in a statement.

Source: Reuters /


The American Dream is Alive and Well in Brazil

The American Dream Goes South by James Dale Davidson author of “Brazil is the New America: How Brazil Offers Upward Mobility in a Collapsing World.”

Not so long ago there was a widespread belief that the United States was the world’s best destination for achieving upward mobility–an aspiration that became known as “the American dream.”

For most of the 19th and 20th centuries this really seems to be true.

But no longer.

Today, the world’s most valuable passport on the black market is not the US, but the Brazilian.

Not only has Brazil been growing at an average rate of 5% while the US economy flat lines, but Brazil seems to have much more scope for growth in the future. Brazil is the world’s largest tropical country, with an incredible bounty of untapped resources. For one thing, in a parched world, Brazil is the new superpower of water. The Economist magazine put it this way, “according to the UN’s 2009 World Water Assessment, Brazil has more than 8000 billion cubic kilometers of renewable water each year, easily more than any other country.” For reference, there are 264 billion gallons in a cubic kilometer. So 8000 billion (or 8 trillion) cubic kilometers is a lot of water.

Thirty five years ago, Brazil was importing food. Today, it is the world’s largest exporter of 5 major crops, as well as of beef and chicken. Brazilian scientists have engineered new, short-cycle tropical versions of temperate crops like soybeans and corn. These mature 8 to 12 weeks faster than the original temperate versions, making it possible for Brazilian farmers to produce two crops a year rather than one as in the United States.

By 2002, the overall average yield for soybeans in Brazil (2.6 tons/hectare) surpassed the average yield in the United States (2.4 tons/hectare). More significantly, the cost of producing soybeans in Brazil fell to about $6 23 per 60 kg bag, just 50% of the US level of $11 72.

While no one apart from a few professional investors was watching, Brazil has quietly surpassed the United States as the world’s leading venue for upward mobility. With a population just two-thirds the size of the US, Brazil has created over 15 million jobs over the past 8 years while the US lost millions of jobs. Combining energy independence and vast natural resources, including 60% of the world’s unused arable land and 25% of its freshwater, Brazil is the world’s first tropical superpower, offering a whole new frontier of growth.

But don’t make the mistake of thinking that Brazil is just a large, well-watered farm. Brazil has a diversified modern economy. In fact, agriculture represents only 5.5% of the Brazilian economy. Brazil also has a large mining sector, but 84% of Brazil’s exports are manufactured products. Beginning with automobiles and airplanes (Brazil is the world’s 3rd leading producer of commercial aircraft). Steel, machine tools, textiles and apparel, cement, chemicals, fertilizer, footwear rail cars, and locomotives are also important Brazilian exports. It would probably surprise most Americans to learn that at various times in the past decade Brazil has also been the leading global exporter of television programs, expertly dubbed from Portuguese into other languages.

Consider the vexed topic of energy independence. US politicians have been chattering about achieving energy independence for decades. Yet they’ve done little or nothing to advance that goal. US oil import ports have risen from about 30% of consumption in the 1970s to as much as 70% recently. Brazil, on the other hand made dramatic progress. In 1974, Brazil imported almost 80% of its oil. Today, Brazil’s net percentage of oil imports is less than 0. Brazil became an oil exporter in 2009. Brazil now has about 100 billion barrels of oil reserves and is widely acknowledged as the world leader in biofuels.

While the real median wage in the United States has been stagnant for quarter of a century, and one in every seven Americans now participates in the food stamp program, reflecting a disturbing growth of poverty. (By official reckoning, 5.4 million Americans sank into poverty according during the first year of the Obama presidency). Meanwhile, almost 40,000,000 Brazilians rose out of poverty into the middle class in the last decade.

While job growth in the United States remained sketchy, and more Americans have qualified for permanent disability than found jobs during the current presidential term, Brazilian unemployment is at 5.8% and wages are rising due to a shortage of workers.

Not so long ago, anyone who wished to live the “American dream” of upward mobility needed to live in the United States. But what was true in the 19th and 20th centuries is no longer true as the 21st century unfolds. Not only did 40 million Brazilians rise out of poverty to enter the middle class in the past decade, Brazil has become a great place to get rich, adding 19 new millionaires every day since 2007. Not bad as compared to the United States where we lost 353 millionaires each day in 2011 alone. Little wonder that growing numbers of Americans are migrating to Brazil for opportunity. As Scott and Mandy Harker said of their decision to leave the US for Brazil, “For us, it was like sitting on a sinking ship, waiting for it to go down.”

Niterói: A Different Kind of Marvelous

By Chesney Hearst, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Growing businesses, beautiful beaches and affordable housing have many home-buyers taking a closer look at Niterói, the city across the bay. Accessible from Rio via the Rio-Niteroi bridge and two ferry services, Niterói is perhaps best known for its iconic landmark, the Museu de Arte Contemporânea (The Contemporary Art Museum).

Yet a deeper look reveals that it is a sprawling city of its own with almost 500,000 inhabitants. Divided into five main regions that contain a total of 48 different neighborhoods, Niterói offers varied types of housing.

Itaquatiara Beach in Niterói, photo by Chesney Hearst.

Everything from beachfront homes to high-rise apartments to plots of land to build your own dream home upon are available and often listed with comparably lower prices than similar properties in Rio de Janeiro.

“As a Carioca, I was really hesitant to live there,” says Andrea Santos, who relocated to Niterói last year because of work. “It really grew on me over time, though. In some ways it can be a slower lifestyle but in others it’s just as hectic and lively.”

One region great for prospective home buyers is that of Oceânica, with its seven separate neighborhoods of Itaipu, Engenho do Mato, Cafubá, Piratininga, Itaquatiara, Jacaré and Camboinhas. With diverse lifestyles and communities, the housing prices can vary throughout the larger region.

In the gated middle to upper class neighborhood of Camboinhas, where buses only stop near the gate and do not circulate through the streets, there is a separation of commercial and noncommercial property, which gives the neighborhood a noticeably different feel.

The noncommercial areas consist of mostly houses all on or in close proximity to the rarely crowded Camboinhas beach. A three bedroom home can be found there for R$430,000 with bigger, beachfront properties staring around R$1 million.

Also a middle to upper class neighborhood, Itaquatiara features a beautiful beach with its rougher Atlantic waves attracting surfers year round. Made up of mostly houses often with backyards, the neighborhood has one entrance and private security patrolling the streets 24 hours a day.

Houses here start around R$800,000 and often go for prices the millions. Smaller homes, apartments and duplexes with proximity to the beach are available from R$250,000 and up depending on square footage and locations.

The Oceânica neighborhoods of Itaipu and Piratininga also offer greener surroundings with even more affordable home prices. There are several three bedroom homes currently selling between R$250,000 and R$350,000.

For those who would prefer to buy an apartment on the Guanabara Bay, there are the neighborhoods of Icaraí and São Francisco. Icarai offers more of an older Rio feel while São Francisco has a vibrant nightlife and dining scene. Apartments in both neighborhoods can be found for between R$400,000 and R$600,000 but for views across the bay the prices currently start around R$900,000.

One drawback the prospective and current homeowners might find about living inside Niterói is the commute across the Rio-Niterói bridge. During heavily congested times, it can take hours to get from central Rio to central Niterói. The ferry services do offer a faster option but can become overcrowded.

Some commuters with the means choose to have two homes, one in Rio where they spend the weekdays and the other in Niteroi for weekends. Also, there are numerous growing businesses in Niterói, so a long commute might not be an obstacle for some. “I live and work in Niterói now,” says Santos. “It’s different, but good. It’s a different kind of marvelous.”

Source: Rio Times Online