Brazil to allocate R$4.5bn to integration routes program

Brazil’s Planning Minister Simone Tebet was not scheduled to speak at the meeting between the teams of President Lula and Chinese President Xi Jinping on Wednesday (20). However, at the end of the meeting, the Chinese leader emphasized the potential for partnerships in two areas: technology, with a focus on the São José dos Campos-based plane maker Embraer, and the long-anticipated rail link between the Atlantic and Pacific, passing through Brazil’s Central-West region.

President Lula then requested Ms. Tebet to discuss the South American Integration Routes program, launched last year to create logistical routes for intra-regional trade and open more logistical alternatives to the Pacific.

The minister informed President Xi that the program boasts funds for road and waterway connections but requires partnerships to build new railways. “When we created the program, we deliberately left out railways,” Ms. Tebet told Valor. “Including them would suggest the Routes depend on them, which they don’t; these are plans for ten years ahead.”

Comprising 190 projects from the Growth Acceleration Program (PAC), the Routes program will receive R$4.5 billion from next year’s budget, according to a report to be released on Monday (25) by the Ministry of Planning and previewed by Valor.

Regarding partnerships with China, the projects Brazil plans to offer for collaboration will be finalized within 60 days, as agreed at the meeting. “We are in a hurry, and the Chinese even more so,” Ms. Tebet said.

The Chinese side remains interested in the bioceanic railway, a partnership previously discussed during the Dilma Rousseff administration (2011-2016). However, the route discussed then will not be maintained as it crosses protected areas and Indigenous territories in Brazil and Peru. Alternative routes are being evaluated, with the main one passing through Acre.

The railway will be vital for connecting grain-producing areas in Brazil’s Central-West and North regions to the Chancay port in Peru, backed by China and inaugurated last week. From March 2025, the facility will be fully operational, with routes to Shanghai. The port requires high cargo volumes to be viable, hence the interest in Brazilian agriculture.

“The railway will greatly speed up exports, but we don’t need it to start exporting through Chancay port,” Ms. Tebet pointed out. Route 2, known as the “Amazônica,” provides access to the port via waterways in Amazonas and Peru.

Other routes are underway. In the coming days, President Lula is expected to sign the order to start one of the program’s most emblematic projects, which is also part of the PAC: the Brazil-Bolivia binational bridge over the Mamoré River, connecting Guajará-Mirim in Rondônia with Guayaramerín in Bolivia’s Beni province.

“That is a historical debt of Brazil,” said João Villaverde, secretary of institutional articulation at the Ministry of Planning, who coordinates the program. The project has been promised since 1903 when Brazil incorporated the area that is now Acre. It forms part of Route 3, the “Quadrante Rondon,” linking the center and north of Brazil to ports in Peru and Chile.

In Brazil, the Routes program is primarily funded by the federal government and the Brazilian Development Bank (BNDES). Neighboring countries receive funding from multilateral organizations. Ms. Tebet aims to engage other institutions, such as the BRICS bank, to seek additional funds.

The Financial Fund for the Development of the River Plate Basin (Fonplata), for instance, is financing a highway in Paraguay leading to the binational bridge in Porto Murtinho (Mato Grosso do Sul).

On the Brazilian side, the access road is also under construction, expected to be completed in October of the same year. It is a PAC project costing R$472 million for a 13-kilometer stretch. “It’s a phenomenal engineering project that neither deforests nor disrupts the Pantanal,” Mr. Villaverde pointed out.

The binational bridge is part of Route 4, the “Bioceânica de Capricórnio,” linking the Brazilian ports of Santos (São Paulo), Paranaguá (Paraná), São Francisco do Sul, and Itajaí (both in Santa Catarina) with Chilean ports of Iquique and Antofagasta, via Paraguay and Argentina.

By the end of 2026, the “only road connection between Brazil and France” is expected to be completed, the secretary joked, about the BR 156 section in Amapá, reaching Cayenne in French Guiana, which is currently being paved. This project is part of Route 1, the “Ilha das Guianas.”

The Routes program aims to enhance the flow of goods and people in the region. Currently, trade among Latin American and Caribbean countries is around 14%, far below the 60% in Asia and 68% in Europe. In 2023, Brazil exported nearly $43 billion to South American countries (12.6% of the total) and imported just over $28 billion (11.7% of the total).

Today, it is cheaper for Argentina to import chemicals from Europe than to buy them from Brazil due to logistical costs, said former Foreign Trade Secretary Welber Barral, a partner at Barral Parente Pinheiro Advogados. Issues like border bridge congestion, high road transportation costs, and the lack of viable road connections between Amazon basin countries also persist. “The projects are very interesting and could significantly impact Brazilian exports to the region,” he commented on the Routes program.

While regional integration discussions have been ongoing since the 1988 Constitution, this project is gaining new momentum, Ms. Tebet said. “We are in the right place at the right time.”

Since the Constitution, the Asian market has gained ground and importance in Brazil’s trade balance. Simultaneously, Brazil’s western frontier, with its agricultural production, has grown more than the national average. Seeking routes to the Pacific is now more than ever a natural trend.

Source: Valor International

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