(Bloomberg) -- Amid a swelling dispute between pro-growth and pro-environment members of President Luiz Inacio Lula da Silva’s administration, Brazil’s Transportation Minister Renan Filho has sought to emerge as a pragmatic voice seeking to build bridges between the two groups.
Filho supports some of the controversial projects that have put in evidence the divide within the government of the leftist leader, including one to allow oil exploration near the mouth of the Amazon river and another to build a railway crossing the rainforest.
Yet he does so with the view that only responsible social development will create the conditions for Lula to deliver on all of his campaign pledges, which mean curbing deforestation and protecting the environment, while reversing recent spikes in poverty and hunger rates.
“We have to boost infrastructure projects because we are a poor country, and people want to eat,” he said in an interview from his cabinet office last week. “For that, the country needs to grow with environmental sustainability in mind. This agenda needs to be defended, but it cannot prevent production.”
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Filho maintains that “coexistence between protection and production” are not only possible but necessary, and cites as an example Petroleo Brasileiro SA’s plan to explore potential offshore at the so-called Equatorial Margin, a biologically diverse region near indigenous lands, mangroves, coral reefs and endangered species.
In mid-May, environmental agency Ibama forced the state-owned oil company to suspend drilling operations at the site because of a nearby reef. A six-month stalemate over Petrobras’s plans have cost it as much as $200 million, by some estimates, while it could take Ibama up to a year to make a final decision.
“You have to know how much (oil) there is, because we are arguing without knowing what we are talking about,” Filho said. “If it’s not relevant, let it sit. But if it is, let’s talk about it.”
Railway Across Amazon
The Ferrograo railway, a plan to link soybean farms in the southern state of Mato Grosso to barge terminals in Para, in Brazil’s north, is an even more pressing concern for the transportation minister. The project, which would transport grain through the Amazon rainforest region, is currently suspended over environmental concerns, with Brazil’s Supreme Court weighing its approval.
The railway is “fundamental for the production flow in central Brazil,” Filho said.
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Filho, whose ministry is responsible for the largest part of Brazil’s federal budget investment, is currently preparing a plan to spend $19.8 billion in public funds on highway projects over the next four years, while raising a matching amount from the private sector.
That will require Brazil to renegotiate contracts on some of the 14,000 kilometers of roads currently in the hands of private companies. One-third of those contracts are currently being restructured due to financial problems. The government wants to negotiate with the companies to find solutions within the existing contracts instead of putting them up for new bids, Filho said.
Lula’s government has plans to auction off another 15,000 kilometers of new highways by the end of his term. But Filho’s ministry is also focused on increasing the use of railroads in Brazil, with aims of raising railway transportation from its current level of 17% to 45% by 2035.
“It’s an ambitious but achievable goal,” he said.
It is also, he added, an example of an infrastructure development that takes the government’s environmental goals into account.
“It is no longer possible to transport the country’s production by roads,” Filho said. “Besides, railways are less damaging for the environment than highways.”
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