São Paulo city sits just under 80 kilometres from an inviting tropical coast. Little wonder that so many of its citizens flock to the beaches by car on the long, hot week-ends of the summer. These days, however, beach-goers often spend more time in the car than on the sand.
Traffic jams make a meal of the journey so much so that families often pack copious snacks and lots of water turning the 50 miles into a bumper-to-bumper journey that can take five hours or more each way.
The government is aware of the enormity of its road infrastructure problem and has made road building a priority in its growth acceleration programme, known as the PAC, with estimated spending from 2007-10 of R$58.3bn.
However, the growth in demand, fuelled by sales of close to 3m new cars a year, is outstripping the drip-drip of supply.
There are some positive signs, however. While the recession has hamstrung other ambitious road schemes in Latin America, particularly in Colombia and Mexico, because of heavy reliance on private funding, prospects for Brazil have remained brighter because the country is less reliant on commercial banking, thanks its well-funded development bank, the Banco Nacional de Desenvolvimento Econômico e Social. The BNDES can stump up to 70 per cent of financing for concessionaires, which has kept projects viable.
Confidence that the BNDES will complement financing is helping concession companies raise funds. CCR, the largest private infrastructure concession group in Brazil, launched an equity issue in October and a near R$600m debenture issue in July. Moreover, concessionaires, enticed by traffic growth, are eager to take on more work in the huge country.
The irony is that concessionaires enthusiasm may be in vain, unless the government can build more consensus on private sector participation.
It has blown hot and cold on concessions and the programme has been painfully slow and unpredictable. Many local politicians continue to demand public works: voters do not want to foot the bill through tolls and politicians like to have a say in the awarding of contracts.
A much-trumpeted plan to use public private-partnerships to construct less busy roads, where tolls would not have covered building costs, has been quietly buried.
Thats making life tough for the big toll road companies. Alessandro Levy, finance manager in the Brazilian office of OHL, a Spanish infrastructure company, says: What we would like to see in Brazil is what we have in our home market, an industry of concessions, where auctions are predictable and regular.
OHL was the biggest winner in the second stage of Federal concessions, taking five of the seven lots auctioned, and gaining 2,078 kilometres of the total of 2,600 kilometres offered.
As in much of Latin America, Spanish road toll companies have conquered a large part of the Brazilian market, thanks to depth of experience at home and aggressive bids at auctions, based on optimistic traffic forecasts.
The second stage of concessions was concentrated on roads in the central industrial southeast belt of São Paulo, Rio de Janeiro and Minas Gerais as well as in wealthy southern Brazil and followed a lengthy hiatus.
The first stage had consisted of six concessions totalling 1,483 kilometres, granted mostly by the Ministry of Transport between 1994 and 1998.
All eyes are now on the ongoing third phase of the Federal concession programme, which covers some 2,000 kilometres of roads, focused on the states of Minas Gerais and Bahia.
The country needs to move fast if it is to achieve its schedule, according to Arthur Piotto, financial director at CCR in São Paulo. Federal projects face a timing hurdle with a ban on tenders six months ahead of the presidential election, slated for October of next year.
The government says it is pushing ahead. In June, it awarded a 680 kilometre concession to a new consortium headed by Isolux Corsan of Spain. It is seeking to complete the planning of roads in Minas Gerais, southern Brazil and Bahia in coming months, says Cleverson Aroeira, head of the department for project structuring at Brazils development bank BNDES. The market has interest in all these concessions, he says.
Investors, however, say that for now theyre more interested in the concessions on offer from the state of São Paulo. Thats in large part thanks to the greater openness of the state in providing information and keep investors abreast of developments, says Mr Piotto.
A new batch of concessions was announced in August by the state secretary of transport. They include three contracts to build and operate most of the São Paulo ring road and a number of roads that connect the main artery between the cities of São Paulo and Rio de Janeiro to the coast.
Concessions may be handed out before the year-end, with the government keen to pursue an aggressive schedule, as it has said that it would like the project to be ready in time for the 2014 World Cup, notes Mr Piotto.
The plan is to duplicate the existing two-lane highways down to the principal coast-bound roads in the east of the state.
Securing investor participation wont all be smooth sailing: the level of road use is highly dependent on the construction of ports on the coast, especially those at São Sebastião and Caraguatatuba. Traffic to the ports should generate the necessary revenues to attract private investment.
Development could get snagged on licensing and building permits and will no doubt run into the hostility of owners of the giant and well-established port of Santos, just up the road.
Its a Catch 22 situation. The government needs to provide a contractual commitment to build the ports in conjunction with the roads, says Mr Levy. Furthermore, the capital expenditure will be high, as the roads down to the coast pass through the densely forested and steep hills of the coastal range, Serra do Mar, he notes.
Holidaymakers may be packing chicken wings and soda for the long journey to the beach a while yet.