US Infrastructure Gets "D" for Dismal

by Seth Borenstein/ Associated Press

January 28, 2009

WASHINGTON - America's roads, public transit and aviation have gotten worse in the past four years. Water and sewage systems are dreadful. The basic physical backbone of American society is barely above failing, a report by top engineers says.

It'll cost $2.2 trillion to fix America's ailing infrastructure, according to highlights of a report being released early, just as the House of Representatives readies its first vote on President Barack Obama's call for a massive economic stimulus spending package.

The country's roads, dumps, dams, bridges, schools and rail systems need lots of that money, say the engineers, who would get a piece of the pie in working on the repairs. Government officials are already aiming billions of dollars at those physical needs as part of what at the moment is a $825 billion economic stimulus package. But the engineers say that's not enough.

Overall, the American Society of Civil Engineers gives the U.S. physical backbone for everything from schools and parks to dams and levees a D. That's the same overall grade as the last time the group gave a report, in 2005, but it really is slipping from a "high D" to a "low D," said report chairman Andrew Herrmann.

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Obama puts spotlight on nation's infrastructure

By Blair Kamin |Tribune critic
January 25, 2009

The age of the architectural icon—that extravagant,exuberant, "wow"-inducing building on a pedestal—is dead, or more precisely, in its death throes. And what will replace it? President Barack Obama, who once dreamed of being an architect, had something to say about that Tuesday in his inaugural address: the age of infrastructure.

Rarely do events so boldly bracket the death of one design era and the dawning of another as they have in recent days. On Jan. 14, the developer of a kilometer-high skyscraper in the Persian Gulf playground of Dubai announced he was shelving the project, the mixed-use Nakheel Tower, which would have been as tall as three John Hancock Centers stacked atop one another.

Then, six days later, Obama issued his blueprint for recovery: The nation "will act—not only to create new jobs, but to lay a new foundation for growth," he said. "We will build the roads and bridges, the electric grids and digital lines that feed our commerce and bind us together."

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Petrobras Unveils $174.4 Billion Spending Plan, Loans

By Jeb Blount

Jan. 24 (Bloomberg) -- Petroleo Brasileiro SA, Brazil’s government-controlled oil company, said state loans will help finance a $28.6 billion spending plan this year aimed at developing the Americas’ largest discovery in three decades.

The investment is part of a $174.4 billion strategy for 2009 through 2013 that the Rio de Janeiro-based company unveiled yesterday. The proposal, a 56 percent increase from the previous five-year plan, counts on an $11.9 billion loan from Brazil’s state development bank, $5 billion from other lenders and another $1.2 billion in unspecified borrowing. Read complete article

In relation to this article, Anand Hemnani, Senior Vice President, Chief Investment Officer of CG/LA Infrastructure said:

"Basically, the Brazilian Government is pumping funds into the economy through Petrobras and also channeling new funds into the economy through soft-loans from the BNDES who recently approved 100R$ billion in new funding for industrials' working capital and capex as well as Banco do Brasil which is focusing mainly on the agriculture and consumer finance sectors."

Petrobras to Pay Most in Bond Market Since ’03 on Oil

Jan. 9 (Bloomberg) -- Petroleo Brasileiro SA, owner of the Americas’ biggest oil discovery in three decades, will pay the most in the bond market in five years to finance a record investment plan after crude prices tumbled.

The state-controlled producer may tap international debt markets within days, said Gianna Bern, president of Brookshire Advisory and Research Inc., a Flossmoor, Illinois-based energy economics research firm. Petrobras will boost borrowing this year from $8.5 billion in 2008 to help fund an investment plan of about $22 billion, Credit Suisse Group AG said yesterday.

Petrobras, whose shares fell 48 percent last year, needs money to pay off $3 billion of maturing debt and fund development of the Tupi field. Its borrowing costs are rising after oil tumbled 71 percent from a July record and the credit crisis curbed demand for emerging-market debt. Petrobras’ 5.875 percent bonds due in 2018 yield 4.92 percentage points over Treasuries, more than on any bond the company sold since June 2003.

“Petrobras will probably have to pay up to tap the international debt market,” said Guilherme Sand, who helps manage about $250 million at Solidus Brokerage in Porto Alegre, Brazil. “Lower oil prices and the fact of additional financing needs make the conditions less favorable in terms of funding costs.”

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Study: Global infrastructure spend to surge in 2009

This year governments will spend 2.9% of world GDP on infrastructure, or an additional $280 billion, according to consultancy CG/LA. Norman Anderson, the firm’s CEO, also predicts that in 2009 the US will move toward a more Spanish-style model of infrastructure financing.

Cezary Podkul

08 Jan 2009 06:47 GMT

This year the world will spend 2.9 percent of its GDP on infrastructure spending, up from 2.2 percent in 2008, according to infrastructure projections for 2009 compiled by Washington DC-based consultancy CG/LA Infrastructure.

The firm arrived at the figure by examining fiscal stimulus packages already announced by countries worldwide and inputting their respective infrastructure portions into a global infrastructure spending model it has developed, CG/LA chief executive officer Norman Anderson told InfrastructureInvestor.

“The announcements are remarkably the same in that they are all 1 percent for the infrastructure piece,” Anderson said. Still, CG/LA predicts that the world overall will fall short of a 1 percent GDP spend on infrastructure since not all announced infrastructure stimulus plans will be carried out.

“The real issue is: who is going to be able to do it? Most developed countries are going to be able to do it. The US, the EU27 and China all can spent that money and make it happen, but countries like Mexico, Turkey and Egypt are countries that I would say are probably less likely to be able to do it,” Anderson added.

As a result, CG/LA predicts that the .7 percent increase, which it estimates to be equivalent to an additional $280 billion, will be led by developed countries, while developing country infrastructure investment will remain flat. Anderson cites China, which last November unveiled plans to spend $586 billion on infrastructure investment over the next two years, as a notable exception to this trend.

In the US, CG/LA foresees that the US will carry out about $190 billion in infrastructure spending. It also predicts that President-Elect Obama’s proposed infrastructure bank will be created. Anderson believes that it would have to be at least $300 million in size in order to make a meaningful impact on US infrastructure. This would be five times larger than the $60 million infrastructure bank plan unveiled by Senator Chris Dodd (D-CT) in August 2007.

Anderson also predicts that, due to the global financial crisis, the US will begin to transition toward a more Spanish-style infrastructure financing model. In Spain, large engineering and construction firms with significant balance sheets, such as ACS and Ferrovial, originate, build, operate and take equity stakes in national infrastructure projects.

The existing infrastructure financing model in the US involves governments selling bonds to hire infrastructure developers that provide construction services but do not take equity in or operate the projects they help bring to fruition. This model, which Anderson estimates to be sixty years old, is nearing extinction as financial players will increasingly join forces with large engineering and construction firms to create a more Spanish-style way of delivering infrastructure.

Several large US engineering and construction firms, such as the Fluor Corporation, already have dedicated resources to take equity in projects that they deliver. Anderson believes that their investment has been “insignificant to date” and will need more incentives from the government before it becomes a leading force in US infrastructure financing.

Call for “intelligent” infrastructure investments in economic stimulus

A coalition of top US transportation officials and technology leaders have called on Congress to make an “intelligent” infrastructure investment as part of economic stimulus legislation by funding intelligent transportation systems and technologies that will provide lasting improvements to the nation’s economic productivity, transportation infrastructure, and environment while also creating jobs and providing an immediate economic boost.

“As Congress and the incoming Administration prepare to invest billions of dollars in the nation’s infrastructure, it is vital that this stimulus plan also puts our nation on the road to long-term economic recovery and competitiveness,” said Scott F. Belcher, president and CEO of ITS America which is leading the coalition. “ITS applications like intelligent intersections with synchronized traffic lights, weigh-in-motion truck inspections, electronic tolling, collision avoidance systems, smart transit vehicles, and real-time information about traffic conditions and travel options will make transportation safer, more efficient, and will lead to greater productivity and a cleaner environment.”

The letter to Congressional leaders, signed by senior transportation officials from California, New York, Michigan, and Oregon; prominent industry groups including AAA, the American Public Transportation Association (APTA), Institute of Transportation Engineers (ITE), Alliance of Automobile Manufacturers, National Electrical Manufacturers Association (NEMA), and American Highway Users Alliance; and companies from the automotive, technology, engineering, and related industries, calls for “a strong economic package that makes a continuing commitment to ‘intelligent’ infrastructure investment,” which “will not only put us closer to fixing our economy, but will enhance the quality of life for our citizens, the productivity of our workers, and the health of our environment.”

According to California Department of Transportation Chief Deputy Director and ITS America Board Chair Randell H. Iwasaki, “Investing in ITS technologies will help reduce traffic congestion, prevent accidents before they happen, provide more effective incident and emergency response, and reduce energy use and emissions. It is critical that we optimize this investment in our nation’s infrastructure by providing resources to deploy technologies that will save lives, time, money, and preserve the environment in addition to creating jobs and economic growth.”

Deja Gobierno pendientes en obra pública

MEXICO, Enero. 2.- El principal cuello de botella para el desarrollo de proyectos de infraestructura es la liberación de los derechos de vía y no existe, por el momento, ninguna iniciativa de parte del Gobierno que proponga agilizarlo, coincidieron expertos.

Si bien el Gobierno federal aumentó 20 por ciento el presupuesto para carreteras en 2009, se anunció un fideicomiso por 200 millones de pesos y se aprobaron una serie de leyes para destrabar los procesos de licitación, sobre el tema de derechos de paso no se avanzó durante 2008.

"Sigue siendo el gran pendiente, no existe un esquema que ayude a agilizarlos, a que se pague un precio de oportunidad y si continúan las cosas así, varios proyectos del Programa Nacional de Infraestructura se quedarán en el tintero", reconocieron especialistas del Grupo Asesor de Fomento de Infraestructura (GAFI).

Norman Anderson, presidente de la consultora CG/LA Infrastructure, explicó que a nivel internacional se cuenta con normativas más ágiles para destrabar los derechos de paso, además se recurre a otras figuras como la expropiación.

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