Brazil opens two key airports to private investment

BRASILIA Thu Dec 20, 2012 9:00am EST

A plane from TAM Airlines flies over Fortress Sao Luis after leaving Santos Dumont airport in Rio de Janeiro September 28, 2011. REUTERS/Sergio Moraes

A plane from TAM Airlines flies over Fortress Sao Luis after leaving Santos Dumont airport in Rio de Janeiro September 28, 2011.

Credit: Reuters/Sergio Moraes

BRASILIA (Reuters) - Brazil announced an 18.7 billion real plan to expand capacity at international airports and invest more in regional aviation on Thursday, as the country races to ease transportation bottlenecks ahead of major world sporting events.

The plan to overhaul international airports in Rio de Janeiro and Belo Horizonte, both host cities in the 2014 World Cup soccer tournament, should attract 11.4 million reais in bids from private companies, the civil aviation authority said.

Rio de Janeiro is also hosting the 2016 Olympic Games.

The plan is part of President Dilma Rousseff's push to attract private investment to upgrade airports, seaports and roads. This aging, overloaded and often crumbling infrastructure has increased the cost of business and choked growth in Latin America's biggest economy.

"We must expand our infrastructure and improve management of the sector, providing better service for our airports," Wagner Bittencourt, president of Brazil's SAC civil aviation authority, said in Brasilia.

In February, the government awarded contracts to upgrade two airports in Sao Paulo state and the main airport in Brasilia for 24.5 billion reais. Since then, Brazil has invited some $90 billion in private investment to modernize its roads, railways and seaports.

The government also said it would invest 7.3 billion reais in improving smaller regional airports. Rousseff said a country the size of Brazil needed better internal air-transport facilities and that improving these links would require public-private partnerships.

Brazil is larger than the 48 contiguous U.S. states, a country with a much more developed road and rail networks. Some communities in Brazil, including many in its Amazon north, can only practically be reached by airplane.

Rousseff's courting of private capital, though, comes as some investors have begun to criticize her government's growing role in the economy.

Changes to the country's electricity concession contracts have caused the shares of many utilities to plunge. Rousseff, however, brushed off the criticism on Thursday.

"I find it very weird when people say we're changing the rules of the game," she said in a speech following the investment announcement. "This is not true, because we want an environment of stable contracts." (Writing by Caroline Stauffer Editing by W Simon and Lisa Von Ahn)

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