Government makes nods to states and private sector in the new PAC, but program needs more adjustments, say experts

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Infrastructure investment program should have around R$ 60 billion per year in resources from the federal budget, adding up to R$ 240 billion in the Lula government. Works at the Angra 3 nuclear power plant, which was part of the first version of the PAC, in 2007 Eletronuclear President Luiz Inácio Lula da Silva (PT) plans to launch a new version of the Growth Acceleration Program (PAC) on August 11, which will bring together a series of of infrastructure works to be carried out in the coming years. The new PAC, as the program is called at the Planalto Palace, has been under discussion since the government transition at the end of last year. According to experts heard by the g1, the government made some important gestures to the private sector and governors, but it is necessary to improve planning so as not to repeat the mistakes of previous administrations. ALSO READ: Fiscal rules, interest rates and the ‘new PAC’: the focus of the Lula government after the first 100 days The PAC was launched in 2007, at the beginning of Lula’s second term, and became one of the hallmarks of PT administrations, bringing together a set of infrastructure works, such as the construction and duplication of highways, oil platforms, bridges, power transmission lines and Minha Casa, Minha Vida units. In 2016, after the impeachment of President Dilma Rousseff, the PAC was replaced in the government of Michel Temer by the Programa de Parceria de Investimentos (PPI), maintained in the administration of Jair Bolsonaro. With Lula’s return, the package of priority works, concessions and public-private partnerships (PPPs) will be called the New PAC. In January, Lula asked each governor to indicate three priority works to integrate the program. The new PAC should have around R$ 60 billion a year in resources from the federal budget, according to the Minister of the Civil House, Rui Costa. He estimates that the Union’s investment will be around R$ 240 billion in the four years of Lula’s third term. There will also be financing lines for states and municipalities opened by public banks – Caixa Econômica Federal, Banco do Brasil, BNDES and Banco do Nordeste. Investment planning For Carla Beni, economist and professor at the Getúlio Vargas Foundation (FGV), the New PAC brings three innovations compared to previous editions: consultation with governors on priority works intended to bring the private sector closer to the program investments in energy transition According to her, the PACs under the Lula and Dilma administrations had mistakes in planning, project definition and what the economist calls “a bureaucratic process mixed with environmental issues” that delayed the execution of the works. “Largely, [houve] a certain anxiety in wanting to announce new programs without having finalized the detailed project”, he says. A 2019 TCU report points out that PAC 1 (2007 to 2010) concluded only about 9% of the planned actions in the period. PAC 2 (2011 to 2014) delivered 26% of the planned measures. “The PAC 2 was, in fact, a rehash, let’s say, of the PAC 1 itself, because several works had project delays. So how has it not been completed [ou] very little was completed, you ended up creating PAC 2”, said Beni. For the founding partner of Inter.B Consultoria, Cláudio Frischtak, the consultation is recommendable, but the priorities defined by each state need to be part of “something that gives rationality to investments in infrastructure in the country”. Frischtak adds that Brazil invests “little and poorly” in infrastructure. According to data from Inter B, in the last two decades, the country invested around 2% of the Gross Domestic Product. “We should be investing possibly twice as much as that,” he said. According to the specialist, many works are on the way or are delayed and end up costing more than the initial forecast. Frischtak also highlights the need to improve the program’s governance, with cost-benefit analysis, before investment, and a post-execution evaluation of the project. “The big failure of PACs 1 and 2 were governance failures. It is a broad and fundamental concept, including. If we don’t have good governance, we will be ensuring that we are going to have a waste of public resources”, he declared. Priority axes The new version of the PAC will bring together the resumption of stopped works, acceleration of works in progress and new undertakings. The projects must be in seven major areas: Transport Urban infrastructure Water for all Digital inclusion and connectivity Energy transition and security Social infrastructure Defense The federal government discussed with states and municipalities the list of projects that will be in the New PAC. Lula discussed the issue this Friday (28) with the executive secretary of the Civil House, Miriam Belchior, who headed the program in the president’s previous administrations. The complete list of projects has not yet been released, however, Rui Costa has advanced projects that should enter the New PAC portfolio, whether for construction, administration concessions or PPPs. Tunnel between Santos and Guarujá, in São Paulo; West-East Integration Railroad (Fiol) between Caetité and Ilhéus (BA); Transnordestina Railway between Ceará and Pernambuco; North South Railroad, between São Paulo and Maranhão; Operation of the São Francisco river system. The Minister of Education, Camilo Santana, also added that the New PAC will also have works in universities and federal institutes.

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