Brazil's supreme court seeks to unlock infrastructure projects

Wednesday, August 29, 2018

The new president of Brazil's supreme court will act to solve legal disputes involving various infrastructure projects to advance investments in the area.

Dias Toffoli, who will assume his post on September 13, will create a task force to resolve legal conflicts that are blocking major infrastructure works, according to O Estado de S. Paulo newspaper, which did not unveil the sources of the information.

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According to a survey by InterB consulting group, nearly 7,000 works stopped at the federal level, at a cost of around 76bn reais (US$18.4bn), mostly due to legal disputes, which, together with uncertainty, are considered key problems for Brazilian infrastructure projects, according to investors and trade groups.

"In general terms, assets linked with infrastructure logistics are more exposed to regulatory risks," Daniel Engel, a lawyer specialized in regulations and infrastructure at Cascione, Pulino, Boulos & Santos law firm, told BNamericas. "The legal side in Brazil is complicated and international investors, not familiar with local rules, sometimes avoid certain segments."

Legal uncertainty also damages the participation of other stakeholders in the infrastructure sector, such as insurers.

"This is indeed a problem. We're not able to attract insurers because even for them the risks are too high. Insurance companies only enter projects when they see profit potential. In the infrastructure area it's too difficult to measure all the risks involved," Paulo Rabello de Castro, the former head of the country's federal development bank BNDES, said in an interview with BNamericas.