World Cup Brazil 2014

Since 2007, Brazil knew that we would host the World Cup, and since May 2009, the host cities knew they would stage matches; even so, after all this time, very little has been done to prepare Brazil for the World Cup (there are delays in stadiums, airports, telecom, transportation, etc).

Below, a few reasons which attempt to explain the delays.

First: cultural habits. Brazilians (particularly Governments) do not have the habit of planning, and, if planning, do not have the habit of keeping to the planned. Any foreign visitor who needs to have an appointment with a doctor knows that Brazilians do not keep time. A national institution in Brazil is the jeitinho, which could be translated as “not doing things the proper and timely way, but trying to make ends meet in a cunning way at the latest time”; unfortunely, FIFA doesn’t tolerate such methods.

Brazil lacks the money. Building a stadium, opening new highways, refurbishing airports, all this costs lots of money. Despite the enthusiasm that Governors and Mayors have demonstrated towards the economic potentials of a World Cup, the money isn’t in the coffers yet, and budget limitations sooner or later bring things to reality. A city such as Natal has a budget of about R$ 8 billion (source), and clearly can not invest R$ 1 billion for the Cup.

Legal limitations. Nine out of the twelve stadiums of the World Cup will be built or refurbished by the Governments. All Government contracts must follow an specific law; this law imposes minimum periods for bidders to present proposals – and if a bidder disagrees with the results, a dispute in Courts may last years.

After the bidding process is finished, then Government and contractors must get all apropriate licenses, such as technical, Historic heritage, environment approvals. Getting licenses to build a new draining and sewage system carved under an old heritage stadium such as Fonte Nova, in Salvador, following all applying norms, can take a lot of time (things could be sped up if they had been planned before hand, but they were not).

Private stadiums (only three: Morumbi, Arena da Baixada, Beira Rio) are not restrained by the bidding laws. On the other hand, the owner of the stadiums will think twice before investing their money in an enterprise with unknown returns: is it worthy to invest US$ 200 million in a stadium to stage three or four matches?

Each of these factors could delay a project for a few months; put them all together, and the result is a several months delay.

The Minister of Sports of Brazil presented yesterday the results of a study conducted by the Brazilian Governments about the impacts of the World Cup 2014 in the Brazilian Economy.

According to the study, from 2010 until 2019, the World Cup 2014 will aggregate R$ 183.2 billion to the Economy; at today’s rate of US$ 1 = R$ 1.75, or € 1 = R$ 2.33, that amount equals approximately US$ 105 billion or € 79 billion. According to IBGE, the official Brazilian Institute for Geography and Statistics, the Gross Domestic Product of Brazil in 2008 was about R$ 2.9 trillion, which means that the World Cup may bring an increase of about 6% to the Economy.

Still according to the study, the impact on the Economy will be more relevant in Brazil than it was in the Cups of France, Germany and South Africa.

Always according to the study, “direct investments will be of R$ 47.5 billion, to be invested in infrastructure, tourism and consumers expenditure; the balance, R$ 135.7 billion, will be of indirect investments, derived from the recirculation of money during the event.”

In infrastructure alone, total expenditure will be R$ 33 billion, 78% of which will come from the public sectors. An amount of R$ 5.7 billion will be invested in stadia, R$ 11.6 billion in urban mobility and R$ 5.5 billion in ports and airports. Other areas which will get a share of the investments: telecommunications, energy, health, tourism.

Tourism alone will aggregate R$ 9.4 billion to the Brazilian economy. During the World Cup, Brazil expects to receive 600,000 foreign tourists, and other 3.1 million Brazilians should also travel within the country.

The World Cup should create 710,000 jobs (330,000 permanent and 380,000 temporary jobs). Permanent payrolls will increase by R$ 6.8 billion, and temporary payrolls by 1.6 billion; this will cause an increase of more than R$ 5 billion in expenditures of the Brazilian families.

From 2010 to 2014, tax collection should increase by R$ 17 billion; according to the Government, this is 33 times bigger than the US$ 500 million in tax exemptions claimed by FIFA.

“The impact in the Gross National Product will be of R$ 135 billion, until 2019. This happens because investments, consumption and tourism continue, even after the World Cup.”

Last year, FIFA appointed the 12 Brazilian cities which should host matches of the World Cup 2014.

Last week, the Minister of Sports in Brazil, when talking about the delays in the works of the stadia, said that some cities could be excluded from the list of hosts; a few hours later, the Minister withdrew, and said that there are no plans of excluding any city.

FIFA demands a minimum of eight host cities. South Africa will have nine host cities and Germany had twelve. Does Brazil need to have twelve host cities? Can Brazil afford it?

The decision to approve the final host cities is up to FIFA; FIFA will certainly listen to CBF before taking a decision. FIFA and CBF see the World Cup as a business, which must return a profit.

It was by a request of the Brazilian Government that 12 cities were appointed as hosts (and there were still other candidates). The Government hopes to gain world exposition to as many cities as possible, during the World Cup. That would be good.

However, what’s the cost of such diversification?

The first stage of the Cup has eight groups, with four countries each; each group will have six matches. It’s only in this first stage that any host city may claim to host matches; past that, when come the rounds of 16, 8, quarter finals, semi finals and final, matches become more and more important, and FIFA will direct them to the bigger cities and stadia.

So, it is likely that smaller cities such as Manaus, Cuiabá and Natal, will end up building a stadium to host only three matches of the World Cup. These cities don’t have strong local teams to occupy the stadia once the Cup is finished. Past experiences have shown that a World Cup can drain host city’s coffers.

Besides, distances in Brazil are much longer than in South Africa or Europe. Transportation infrastructure in Brazil is poor. By lack of money or of competence, the works in all stadia are delayed. FIFA was concerned with the dealys in South Africa, and will try to avoid the same mistakes in Brazil.

It will be no surprise if FIFA decides to reduce the number of host cities in Brazil.

A few months ago, IATA, the International Air Transportation Association, issued a warning informing that Brazilian airports are not ready for the World Cup.

Last week, Veja, the most influential Brazilian magazine, published on the Issue #2159, April 7th 2010, a detailed report (pages 68 through 77) about the infrastructure of the Brazilian airports, and concluded that: most airports are already working above nominal capacity; even with the planned investments (and assuming those investments will be actually realized), several airports will be still uncapable of handling the expected increase of traffic by 2014.

Access to previous issued of Veja is free (click here and search for the desired issue).

According to Veja, problems stem from mostly two reasons: the number of passengers in Brazil has been growing very rapidly, and the investments have been growing too slowly.

Brazil is experiencing an economic boom, and people from lower classes are now travelling by air, rather than by road. Besides, some new air companies were created recently, and competition is being prices downwards. These factors are increasing the number of passengers in the airports.

The graph below shows the impressive growth rate year-on-year of the number of passengers in all major Brazilian airports combined; from 2006 to the end of 2010, the total number of passengers should grow by more than 100%. During the same period, the nominal capacity of those airports didn’t increase anything.

According to Veja, the main consequences of this lack of investments are: long check-in queues; over crowding in the boarding rooms; long delays to claim baggages; shortage of fingers for aircrafts to dock and passengers to board and unboard.

The image below compares the airports of Guarulhos, in São Paulo (the busiest in Brazil) and the airport of Gatwick, in London.

São Paulo receives a bit more than 21 million passengers per year (nominal capacity is 15 million per year), whereas Gatwick receives a bit more than 34 million; in Guarulhos, there are 61 fingers, against 108 in London; São Paulo have 260 check-in counters, against 317 in London. São Paulo looks much more crowded.

All major Brazilian airports are ran by Infraero, an State owned company. Infraero’s site publishes statistics about passengers and cargo in all airports.

Infraero collects the boarding taxes paid by passengers (R$ 19.62 – about US$ 12 – for flights within the country, and US$ 36 for international flights); besides, Infraero collects several fees from aircrafts operators.

Infraero should employ that money to maintain airports running smoothly; but apparently they are not capable of doint that.

This other report talks about problems in Brazilian airports.

The past two days, storms in Rio de Janeiro caused floods, landslidings, deaths, (toll is at 100 and counting) and chaos;  see reports and photos by the New York Times, Washington Post and the BBC.

The arena Maracazinho was seriously damaged. Maracanã, the stadium which should stage the final match of the World Cup 2014, was also flooded – an international match had to be postponed.

FIFA already learned about the news. FIFA’s concern is, obviously, how the World Cup could be affected by the rain.

The graph below, made by the Official Weather Institution in Brazil, shows the average precipitation levels (blue bars) and temperature (orange line) for the city of Rio de Janeiro.

The graph shows that the rainy season starts with the summer, in December, and lasts through April. However, the graph shows also that even in the drier months of June and July (when the World Cup 2014 should happen), there is still a considerable probability of raining.

But raining would not be a big problem, if the city were prepared to face it. Most of the  host cities have a bad draining/sewage system, combined with a bad rubish collection system; as a consequence, the rubish blocks the draining holes, and the water floods the cities.

Besides, several host cities are surrounded by hills and mountains, and many people live near the  top, coast and foot of them. This unordered occupation combined with heavy rains result, year after year, in landslidings and deaths.

Yesterday, FIFA announced that Brazilian corporation OI will be World Sponsor of the World Cup 2014 (the word Oi means “Hi” in Portuguese).

So, besides having stadium works behind schedule, airports not ready,  poor transportation infrastructure (and new projects also delayed), now FIFA will partner with the worst  telecommunication company in Brazil to provide the communications infrastructure of the World Cup 2014.

The sound of the word FIASCO is growing louder and louder.

As FIFA said, Oi is the largest telecommunications company in Brazil. But there are many other facts that FIFA didn’t comment on; this post will direct to a few sources in the internet which talk about Oi; from this point below, personal opinions were avoided.

Oi is the new name (changed a few years ago) of Telemar (at the time of this writing, www.telemar.com.br redirected to www.novaoi.com.br).

Telemar was a consortium created to participate in the privatization process in 1998. There were several accusations of corruption in the participation of Telemar (a detailed report is here); there are voice recordings of high staff Governments indicating that the selection of bidders was biased, and that pension funds and BNDES funds (public money) were used to favor certain competitors and unfavor others (by the way, Telemar won the bidding process for one of the areas with an overprice of only 1% above the minimum bid; the winners of the other privatization areas had to pay overprices of 64%, 47% and 6% – read more about Telemar and bribes).

Today, the man behind Oi is Daniel Dantas, banker, owner of Opportunity (who, at the time of the privatization process, was involved with consortium Brasil Telecom).

Mr. Dantas appeared on the news several times in the past few years, such as (among others that I won’t remember) having spied on competitors, having spied members of the Government; having ‘business disagreements’ with Citicorp.

In 2005, news came out that Telemar had businesses with Lulinha, son of President Lula. Formerly, Lulinha worked in a Zoo, being paid barely above minimum wage; after his father was elected President, Lulinha started an obscure TV program, that few people cared about; Telemar paid R$ 5 millions to sponsor that program, and Lulinha became millionaire.
In 2008, Telemar wanted to buy Brasil Telecom (other of the winning bidders in the privatization process). This was against the law, because would result in too high concentration of the market. Just at the right time, however, Brazilian regulatory agency Anatel changed the legislation and allowed the purchase.
Brazilian news sites are full of notes about the coincidences involving Dantas, Oi, José Dirceu, Anatel, Lulinha, etc.

Dantas was arrested on July 8th 2008. Dantas threatened to open his mouth and talk about Senators, Deputies, judges. On July 9th, Dantas is released. On July 10th, Dantas is arrested again. And on July 11th, Dantas was released again.
The orders to arrest Dantas were issued by a First Instance Judge, Fausto Martin de Sanctis; the orders to release him were issued by a Justice of the Supreme Court, Gilmar Dantas.
On July15th 2008, Humberto Braz,  the lieutenant of Dantas, was arrested, charged of trying to bribe (US$ 1 million) a Federal Agent, so that the agent would exclude Dantas and his sister from criminal investigations. In conversations recorded by the Police with Judicial authorization, Mr. Braz says to the Agent that “Daniel Dantas is worried only about what’s happening today. Up there, what’s going to happen there (in the Superior Courts), he doesn’t care. In the STF (the Supreme Constitucional Court) and in the STJ (the Supreme Law Court), he won’t have any problem”.
Today, Dantas is free, and the criminal process against him is still in the Courts; Brazilian news sites are full of notes about the process.

After purchasing Brasil Telecom, Oi became an even bigger company. But clients became more and more unhappy with the services. A survey in google for oi telemar procon (Procon is the Consumers Defense Agency) returns 200,000 pages. Oi is constant presence in the list of most complained about companies in Brazil (notice: among all companies, not only telecom companies); reclameaqui.com.br, a site about complaints, has thousands of records against Oi.

Update, April 10th 2010. Yesterday, April 9th, newspaper O Globo published a short note informing that the Brazilian Government was considering to contract Oi to manage the National Bandwidth Plan. The note sparked more than a 100 comments, almost unanimously attacking Oi; comments were on the line of “Oi is dishonest, Oi doesn’t deliver the bandwidth I paid for, Oi is an expensive monopolist, my bandwidth internet hasn’t been working for days, Oi is the worst telecom company in Brazil, I had to bribe Oi employees to have my bandwidth installed” and so on. Definitely, Oi is  not the most popular corporation in Brazil.

This is the company that FIFA is partnering with.

The Brazilian airports are not ready for the World Cup 2014 and the Olympic Games 2016, says Giovanni Bisignani, director of Iata (International Air Transport Association); in an interview, when asked whether the current aerial network could cope with the expected influx of visitors, the director said: “No, today we would have serious troubles”.

Bisignani also declared that, if the Brazilian Government decides to privatize existing airports or contract the building of new ones, laws should be passed to guarantee that all airports are ready and fully working in 2014: “the airports can’t be turned into money printing machines; there is no point in imposing fines to contractors, if visitors have already been frustrated”.

In regards to this same matter, Bisignani said that Brazil should seek to avoid the problem in South Africa, where, to pay the dividends to the airport operators, the airfare taxes will experiment a raise of 133%.

In response to Iata, the Minister of Defense (which controls all air traffic in Brazil), Nelson Jobim, declared that “we indeed have problems in the airports, but we are working to have them ready by 2014″.

The Minister said that there is an over estimation of the increase in the number of visitors during the World Cup. According to the Minister, during the months of the Cup, the circulation of passengers will increase by a figure of 2,7 million, which represents only 10% more than the normal traffic.

What the Minister doesn’t seem to remember is that Brazilian passenger have no choice but to use – and continue using -  these airports (photo shows a day of chaos in Rio de Janeiro airport). Foreign visitors may or may not come back – and they can tell the World about the problems of Brazilian airports.

One of the main transportation projects for the World Cup 2014 is the building of a bullet train linking São Paulo and Rio de Janeiro, the two largest Brazilian cities. In Portuguese, the train is called Trem de Alta Velocidade (High Speed Train), or TAV; visit the official site of the High Speed Train.

The official TAV site still informs (wth endorsement of the Federal Government) that operations should start before 2014; however, there are strong doubts about that. There are several obstacles to the project, including technical, financial, political and environmental.

In 2007, it was estimated that the bidding process would be finished by 2008, and the trains would be running after seven years; today, it is growing stronger the opinion that the train won’t be ready before 2015.

The Government is looking for private partners to build the railway. On December 7th 2009, the federal Government announced the criteria to be used to select the partners; 70% of the scoring of bidders will be related to the necessity of official fundings (the smaller the necessity, the higher the score), and 30% will be related to the price of ticket to be charged from passengers (the cheaper the ticket, the higher the score).

Below, more information about the project.

The map above shows the route of the railways (click the map to enlarge). Stations in red are already confirmed in the project, stations in green are still under analysis.

One line would connect Campinas (one the largest cities in the State of São Paulo) and the airport of Viracopos (international airport) to the city of São Paulo. The other line would connect São Paulo to Rio de Janeiro, with intermediary stations in the airport of Guarulhos, São José dos Campos and Volta Redonda.

Trains will be 200 meters long. Estimated maximum speed is 300 km/h. Estimated travel times, leaving from Rio, are: to Volta Redonda, 34min; to São José dos Campos, 1h17min; to São Paulo, 1h33min; to Campinas, 2h08min. Currently, flying from São Paulo Rio takes about 1h50min, and driving takes about 5 hours.

There will be two categories of services: Express (between Campinas, São Paulo and Rio) and Regional (intermediary cities). Express trains would fit 458 people, in two classes; regional trains will fit 600 people, in one class.

Estimated prices for a ticket São Paulo – Rio are: R$ 150, economic class, off peak trips; R$ 200, economic class, peak time trips; R$ 250, executive class, off peak; R$ 325, executive class, peak time. Currently, a flight costs between R$ 180 (off peak) and R$ 400 (peak). Current exchange rate is US$ 1 = R$ 1.70.

About 61% of railways will run on surface, 21% across bridges and 18% underground.

Estimated costs total R$ 34.6 billion (about US$ 20 billion). Most of the costs correspond to civil woks; indemnifications will take 11%; systems and equipments will take 10%, and the trains themselves will take 8%.

Is the transportation infrastructure in Brazil ready for the World Cup 2014? Will it be?

First point: Brazil is much bigger than South Africa, and the host cities of the World Cup 2014 are much more far apart than those in 2010.

In France, Japan, Korea and Germany (hosts of the most recent Cups), the main means of transportation between cities was the train. Brazil has no railway networks for transportation of passengers (most long distance railways operate cargo only); a bidding process is going on to build a bullet train between Rio and Sao Paulo, but it is uncertain whether it will ready by 2014 (estimated costs border US$ 20 billion) – update: the Government already declared that the bullet train will be ready only by 2018.

That means taht there are not and there will not be trains connecting the host cities of the World Cup 2014.

Brazilian airports are poor, compared to those in developed countries. Usually, there is only one major airport in each State (exceptions are only São Paulo, Rio and Minas Gerais), which concentrates all traffic. See notes about the airports here, here and here.

Air control, despite recent accidents (like this and this), is considered safe; however, it is uncertain whether the system will stand the major increase in air traffic expected for the World Cup.

Besides, supply of seats is limited. Just two airlines, TAM and Gol, control about 90% od all flights; there are strong restrictions for other international companies to operate in Brazil. This lack of competition caused the services of both companies to be poor; the companies rank amongst the most complained about in the Consumer Defense Agencies in Brazil. The companies never had interest in expanding the aerial network in Brazil; several of the host cities have no direct connection today (usually, a stop over is necessary in the major hubs: Sao Paulo and Brasilia).

Brazil announced heavy investments in airports, but frauds and delays are already being reported. It is dubious whether air companies will have the willing and the money to buy new aircrafts.

Brazil has an extensive network of highways. Several roads are in bad conditions, but the Governments are making efforts to improve them, either by chartering operations to private parties (NovaDutra operates the highway between Rio and Sao Paulo), or by investing large amounts of money (BR-101, which connects Salvador, Recife, Natal and Fortaleza, will be double laned next year).

So, long distance highways should be in good conditions for 2014. It remains to be seem if foreign visitors will endure the long distance drivings and the proverbial lack of education of Brazilian drivers (from 1999 to 2007, a staggering 254,000 deaths occurred in transit accidents in Brazil).

Governments are investment heavily to improve urban circulation; more highways, more metros, better urbanization. This will certainly help the residents, but won’t help visitors move around cities.

Then, there are ships. Almost all host cities have a port nearby. Cruises are growing in Brazil, and ships may be an option in 2014.

So, if the poor infrastructure in South Africa raises concerns in CBF, the situation in Brazil seems even worse.

Metrorec, the State owned company which runs the metro of Recife, one of the host cities of the World Cup 2014, just announced that the works to build a new metro station will start in January of 2010; the new station should be finished by the end of 2010.

In Recife, the matches will be played in a complex called Cidade da Copa (City of the Cup), which will include a new stadium called Arena Capibaribe; the complex will be built in the city of São Lourenço da Mata, in the metropolitan area of Greater Recife.

The new metro station will be called Cosme e Damião (the Portuguese for brothers Saints Cosmas and Damian). The new station will be built between the already existing stations of Rodoviária (the inter State bus station) and Camaragibe. The works will be conducted at night, so as to not interfere with the daily traffic of trains and people.

The new station will be at a distance of approximately 600 meters (0.4 mi) of the entrance of the City of Cup, and about 2,5 km (1.6 mi) of the Arena Capibaribe (the dashed red line shows the border between Recife and São Lourenço).

The link between the metro stations and the stadium will be by bus. Metrorec informed that there are plans to create shuttle bus services between the arena and the three stations, Rodovária, Cosme e Damião, and Camaragibe, to try to divide the public and facilitate access and dispersion in days of matches.

This new station serves one of the poorest areas in Recife, and had been expected by local residents for a long time. Governments had a project ready, but lacked funds to build it. The Cup is starting to bring benefits to people of Recife.