About two years ago I developed a research about PAC, the Brazilian “Big Push” infrastructure policy. Launched in 2007 by President Lula the purpose of PAC was to unlock growth by developing the infrastructure of the country – a clear “infrastructure-led development” approach.
More than tackling the infrastructure gap alone, the theory of change of PAC also included other broad – and ambitious – objectives, such as income and employment generation, reduction of regional and social inequalities and macroeconomic stability.
In 9 years of execution PAC consumed roughly BRL 2.3 trillion in federal funds (according to the reports of SEPAC – the Secretariat of PAC). Massive projects that you may have heard of, such as Belo Monte, Jirau, Santo Antonio, Abreu e Lima Oil Plant, the integration of the São Francisco basin, were executed within PAC. No doubt a colossal policy intended to tackle several infrastructure gaps at the same time and with a decentralised execution of projects spread all over the country.
My research identified policy issues in many areas of the design of PAC. This included (i) a failed monitoring structure that did not allow a proper supervision of the projects; (ii) funding rules that created the incentive for over-spending; and (iii) unclear eligibility criteria which stimulated the political and electoral use of the program. In my analysis the grey areas in the policy design opened opportunities for corruption and would help explain the cyclical pattern of corruption that seems to be installed in infrastructure in Brazil. The full research is public available for consultation.
Recently the research came back to my thoughts. Late September I had the opportunity to discuss the subject with a group of professors from the Pontificia Universidad Católica do Peru and with a wider audience during the XII Conference of State Reform in Lima, which focused on anticorruption policies. One of the topics was corruption by design with a comparative analysis of Brazilian and Peruvian case studies in infrastructure.
This week it happened again. The media headlines about the release of Marcelo Odebrecht from prison forced me to take stock of my research. More than considering how PAC’s incentives may have changed after the government transition and the many budgetary cuts, I was particularly concerned with the cyclical pattern of corruption referred to above. My recurrent thoughts were whether new infrastructure policies implemented after PAC could be under similar perverse incentives for corruption.
It didn’t take me a hard policy mapping exercise to find a bright new and shining infrastructure program started after PAC. The ‘Investment Partnership Program‘ (or in Portuguese ‘Programa de Parcerias de Investimento – PPI’) started in 2016, implemented by the Federal Law No. 13,334. The catchy name used to advertise the program is ‘Projeto Crescer’ – the Growing Project.
According to the information available in the program website, PPI was created by the Federal Government to articulate investments in infrastructure using partnerships with the private sector. The intention is to promote a new influx of investment to be channelled through concessions, PPPs and privatisations.
Transparency and efficiency are used as core policy slogans – in a similar manner as employed by the Decree No. 6,025 that implemented PAC in 2007. And the theory of change is also very similar to PAC with a focus on big objectives of employment generation and economic growth.
Based on the available information, it seems that 146 projects were included in the program so far. Projects are as diverse as railways, highways, airports, ports, energy, mining, oil & gas, to be subject of partnerships and concessions all over Brazil.
Just to give an idea of the volume of investments involved in the PPI, only one of the projects – an integrated highway in the south part of the country – has an estimated budget of BRL 8.5 billion (Rodovia de Integração do Sul – (BR-101/290/386/448/RS).
According to the Law No. 13,334, the Secretariat of the PPI will be in charge of “coordinating, monitoring, evaluating and supervising“ the actions of the Program – a role that seems very familiar to the mandate of SEPAC under PAC.
The eligibility for the program seems unclear. Article 1 of Law No. 13,334 adopted a broad wording that pretty much admits to the program any public infrastructure project provided that it is structured as a concession, a PPP or a privatised venture. Looking at the implementation level, the Presidential Decree No. 9.059/2017 only listed the projects that were appointed by the President as eligible to the program but without considering the reasons why such projects qualified.
The same is seen in some resolutions from the Committee of PPI which submitted projects to the approval of the President. Again there is no consideration of the reasons why they qualify. It is only mentioned in the PPI website that the Committee is composed by a “highly technical staff“.
Since the program is new and the projects are mostly in the bidding and contract design stage, monitoring reports are not available at the moment. It is also yet to be seen how the Secretariat of the PPI will develop its ‘monitoring and supervision‘ attributions.
Of course there are crucial differences between PAC and PPI; the main one is the fact that PPI puts the execution of the projects outside the public arena. But opportunities for corruption can still emerge. In a moment when the country tries to recover from a series of traumatic events involving corruption in the infrastructure sector, it is necessary to avoid the mistakes of the past and create policy designs that stimulate integrity, real (and not only slogan) transparency and embedded citizen accountability. I really don’t want that PPI becomes my next case study about corruption by design.