16 de março de 2012

In Rio de Janeiro, a sea of investment

Funds to be invested in infrastructure, the industrial park and in the improvement of ‘quality of life’ in the region come to R$ 181 billion (US$ 103.43 Bn) by 2013

Rio de Janeiro is experiencing a time of economic effervescence. Investments announced by the state in urban infrastructure and logistics, and in the state’s industrial park will reach the sum of no less than R$ 181 billion (US$ 103.43 Bn) throughout the 2011-2013 period. These include public and private investments, both domestic or from abroad. If one takes into account the state’s small territorial area of only 43.7 km2, Rio de Janeiro then ranks as the greatest hub of investment in the world, with an average of over R$ 4 million (US$ 2.29 Mio) in incoming funds per km2. The estimate is provided by the Federation of Industries of the State of Rio de Janeiro (Firjan) whose survey of large and medium-sized projects scheduled to be implemented in the region was published in the document “Decisão Rio 2011-2013” (‘Decision Rio Investments 2011-2013’ - a study of investments planned for the period in the state of Rio de Janeiro)

The organization, which gathers 105 unions of employers in industries throughout the state, with a total 9,250 member companies, conducts an annual survey of investment intentions in the state of Rio de Janeiro among private and public investors for a prospective three-year period. The goal of the survey is to gather all the information into a single document and present the main trends to decision makers in the public sector and private enterprise, making it a complete ‘mapping of opportunities’. The latest edition of the survey confirmed the surprising amount of investment funding revealing the new profile of Rio de Janeiro as a state with gigantic and diverse opportunities for the short, medium and long terms.

Another survey conducted by the State Department of Economic Development, Energy, Industry and Services of the State of Rio de Janeiro estimates that by 2020 the region will have received R$ 213.8 billion (US$ 122.2 Bn) in investments. Nearly 80 works and construction projects, both public and private, are being monitored by the department  based on data collected from areas such as utilization of tax incentives, demand for land and through dialoguing with other levels of government. Together, the projects are expected to generate at least 104,000 jobs in various regions of Rio de Janeiro state.

Oil production chain at the top 
According to data released by the aforementioned department, the chain associated with the exploration and production of petroleum ranks first among the investments scheduled for the period (R$ 83 billion - US$ 47.43 Bn). Then comes logistics, with R$ 41 billion (US$ 23.43 Bn); urban infrastructure - R$ 20.9 billion (US$ 11.94 Bn); steel - R$ 20.1 billion (US$ 11.49 Bn); energy - R$ 14.8 billion (US$ 8.46 Bn); petrochemicals - R$ 14.6 billion (US$ 8.34 Bn); shipbuilding and boating - R$ 9.5 billion (US$ 5.43 Bn); manufacturing - R$ 7.9 billion (US$ 4.51 Bn); services - R$ 1.3 billion (US$ 740 Mio); and telecommunications - R$ 800 million (US$ 457.1 Mio). The department’s survey includes projects such as the Comperj (R$ 14.6 billion - US$ 8.34 Bn); the Açu Port Complex (R $ 8.3 billion - US$ 4.74 Bn); Angra 3 (R$ 4 billion - US$ 2.29 Bn); the redevelopment (urban renewal) of the port area of Rio de Janeiro (R$ 3.5 billion - US$ 2 Bn); the “Arco Metropolitano” or Metropolitan Beltway of Rio (R$ 1.2 billion - US$ 686 Mio); and the refurbishing of Rio’s Maracanã Stadium (R$ 700 million - US$ 400 Mio).

The estimation prepared by Firjan also indicates that the chain associated with oil and gas production is responsible for the largest volume of the funds available for investment. Of the R$ 181 billion (US$ 103.43 Bn) estimated for the 2011-2013 period, no less than R$ 107.9 billion (US$ 61.66 Bn) is expected to be allocated to this sector. Another R$ 36.3 billion (US$ 20.74 Bn) going toward investments in infrastructure; R$ 29.5 billion to be directed to the manufacturing industry; R$ 0.9 billion to be invested in tourism and R$ 6.7 billion for various other sectors.

The East of Rio de Janeiro state is the region that should receive the largest amount of investment in the next two years, followed by the state’s North, South and, finally, the city of Rio de Janeiro, which will receive 4.2% of the scheduled total.

Among investments in industry, the most outstanding are: Comperj - the largest work in progress in the country, whose project design was altered making it a major refinery; and steel-industry related investments of some R$ 3.6 billion for the construction of the Ternium Steel Mill within the Port of Açu Industrial Complex and for the expansion of the Gerdau plant, which is already established in the state. In addition to these projects, you have the construction of two shipyards; one for the Brazilian Navy which will be responsible for building the first Brazilian nuclear submarine, and one belonging to the OSX company focused on building offshore rigs and support vessels. The two shipyards will receive R$ 6.2 billion during the 2011-2013 period.

Of the R$ 36.3 billion (US$ 20.74 Bn) scheduled for investment in infrastructure, almost half of that (R$ 16.7 billion) will go toward investment in the production of energy, which includes projects such as the construction of the Angra 3 Nuclear Power Plant, under construction, and a 2,100 MW coal-fired thermoelectric power plant in the Port of Acu Industrial Complex as well as investments in renewable energy.

Outstanding in the sectors of Transportation/Logistics and Urban Development are: the Açu Seaport Complex, under construction in the municipality of São João da Barra (North of Rio de Janeiro State) which should attract investments of R$ 1.8 billion (US$ 1.03 Bn) through 2013; the four corridors for Bus Rapid Transit (BRT) in the city of Rio de Janeiro (R$ 2.1 billion - US$ 1.2 Bn); and the “Porto Maravilha” project for the revitalization of state capital’s seaport district (R$ 1.8 billion).

Of the R$ 181 billion in investment planned for the period, about R$ 11.5 billion (US$ 6.57 Bn) will be linked to the 2016 Olympic Games of which R$ 5.8 billion (US$ 3.31 Bn) has already been detailed by the public and private sectors, including hotels, investments in infrastructure and refurbishing/ construction of apparatus for the Olympic Games.

The estimate made by Firjan does not include various ventures that, despite their importance, were classified only as ‘potential’. These include the project for a high-speed train (TGV) linking the city of Rio de Janeiro to São Paulo and Campinas, estimated at about R$ 36 billion (US$ 20.57 Bn); Chinese steel maker Wisco (Wuhan Iron and Steel Corporation), of approximately R$ 9 billion, which is expected to establish itself at the Port of Açu Industrial Complex; and other investments in the Port of Açu Industrial Complex, such as a 3,300 MW natural-gas fired thermoelectric power plant.