Paraná seeks R$61bn investment to become regional logistics hub

Paraná is looking for investors to spend at least R$61.5 billion in logistics infrastructure projects in the state. The government’s idea is that these investments, combined with the initiative of agricultural cooperatives to increase the internal processing of their produce from the countryside, will make Paraná’s industry the third largest in the country.

With its privileged position between different agricultural commodity producing regions, consumer centers, ports and the main neighboring countries, the plan is to use these investments to make the state the logistics hub of South America, boosting Paraná’s industry.

According to 2021 data by statistics agency IBGE, Paraná already has the fourth largest industrial production in Brazil, behind São Paulo, Rio de Janeiro, and Minas Gerais. In the first half of 2023, the state’s economy grew by 8.6% compared to the same period last year, according to the Paraná Institute for Economic and Social Development (Ipardes), compared to 3.7% for the national average—the IBGE does not yet state-by-state data. For Governor Ratinho Júnior, this performance indicates that Paraná can gain even more relevance on the national scene.

According to the IBGE, Paraná produced 6.1% of the country’s GDP in 2021, the fifth largest share, behind Rio Grande do Sul. “The first thing an entrepreneur assesses about where he is going to open a business is logistics,” Mr. Ratinho Junior told Valor. “We are committed to providing the infrastructure for more companies to come to Paraná.”

Part of the industrial development that has been taking place in Paraná is due to agricultural cooperatives, which are becoming agro-industrial organizations. They already process almost half of what they produce in the fields and export it to over a hundred countries. Around 80% of this production is transported by truck, not least because the railroads that cut through the state can’t handle so much production.

“Our main bottleneck is transportation,” said Nelson Costa, superintendent of the Federation and Organization of Cooperatives of the State of Paraná (Fecoopar), which brings together those responsible for 62% of agricultural production in Paraná, the third largest in the country, according to IBGE.

In the road sector, the largest concession package in the country is underway. There are 3,368 kilometers of federal and state roads, which are expected to receive investments of R$50 billion, the majority up to 2030. Almost half of the sections will receive road dualling works; 80% of the roads under concession will be dual.

The largest highways are part of the so-called “Integration Ring,” which connects the main cities with the capital, Curitiba, and the port of Paranaguá, and which had been granted under concession in 1997.

With the end of these contracts in 2021, however, toll gates were opened and concessionaires paralyzed services. Since then, problems caused by rain and lack of maintenance have affected the transportation of people and cargo. The productive sector has high expectations for the new concessions, which will last 30 years. “We have no other option. The government cannot pay for what the roads need,” said Edson Vasconcelos, president of the Federation of Industries of Paraná (Fiep). “We cannot run the risk of having a logistical collapse.”

Of the six lots in the concessions package, two have already been auctioned. Lot 1 was won in August by the Pátria group, which committed to investing R$7.9 billion in works and R$5.2 billion in the maintenance of roads connecting Curitiba to the Campos Gerais region, including Ponta Grossa. Lot 2 was won by the EPR Group in September. The company must invest R$10.8 billion in works on roads between the capital and the coast and pay R$6.5 billion in maintenance over the three decades of the contract.

In both auctions, the winning companies were the only ones to submit proposals. Marco Aurélio Barcelos, head of the Brazilian Association of Highway Concessionaires (ABCR), said that the new auctions, scheduled for 2024 and 2025, are expected to have competition. According to him, the size of the projects tends to attract foreign groups.

A further R$11.5 billion is expected for a 628-kilometer railroad between Cascavel and the port of Paranaguá: the New Ferroeste. The current Ferroeste runs from Cascavel to Guarapuava, where it connects to the Malha Sul, which passes through Ponta Grossa and on to Paranaguá. On this route, however, a refrigerated container (used to transport meat, for example) takes up to five days to complete the journey.

Nova Ferroeste could reduce this time to 20 hours and cut transportation costs by around 30%. The project includes expansions to the west of Santa Catarina and Mato Grosso do Sul, major meat producer regions, and could reach 1,567 kilometers. The plan was included in the new version of the federal government’s Growth Acceleration Program (PAC). Its total cost could exceed R$35 billion.

The state government wants to license and auction, by the beginning of 2025, a permit to operate the entire route of the railroad for 99 years. The winning company would be responsible for building the Cascavel-Paranaguá line and would be able to extend it while making money after operating the first stretch.

Mr. Costa, with Fecoopar, defends emergency works on the current railroads while the New Ferroeste doesn’t start operating, which would only be possible in 2032. The federal government is studying an early extension of the Malha Sul concession for extra investments of R$10.3 billion in the route. Rumo, the current concessionaire, confirmed its interest in the deal and said that Paraná handles 80% of the network’s cargo.

Businesspeople from Paraná are also calling for speed in the works at the Cais Leste project, in the port of Paranaguá and the opening of the Integration Bridge, a new link with Paraguay, in Foz do Iguaçu.

The Cais Leste project, whose works are expected to begin in the coming months, will cost R$592 million to the state coffers and increase the capacity for unloading wagons at the port by 63%. The bridge is ready. It cost R$360 million. Its access roads and new customs facilities, which are expected to cost another R$150 million, however, should only be completed in 2025. Everything will be paid for by Itaipu.

Governor Ratinho Junior also highlights that he is holding talks to convert the airports of Maringá and Cascavel into terminals focused on exports, to increase the flow capacity of agro-industrial production and its penetration abroad. “I want to transform the state into the world’s supermarket.” Mr. Vasconcelos, with Fiep, lives in Cascavel, a municipality in the west of the state that has grown with this alliance between countryside and industry and where today there are plenty of job vacancies. For him, Paraná has found a way to grow and, associated with agribusiness, the local industry will be the third largest in the country.

Source: Valor Econômico

Click here to read the original news material: https://valorinternational.globo.com/economy/news/2023/11/29/parana-seeks-r61bn-investment-to-become-regional-logistics-hub.ghtml

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