UPDATE 5-Brazil seeks to privatize key stretches of Amazon highways

Brazil will add the Trans-Amazonian Highway to the list of projects for privatization, its infrastructure minister said on Tuesday, seeking new investment to pave part of a dictatorship-era roadway already blamed for extensive deforestation. The road concession will be added to a priority list for privatization at a meeting next month, Infrastructure Minister Tarcisio Freitas told Reuters in an interview.

The government will package a short section of highway with a concession to run a major section of BR-163, a key northern route for shipping Brazilian grains, a ministry spokesman said later on Tuesday. The 40-km (25-mile) section of the Trans-Amazonian up for privatization will connect BR-163 with the river port of Miritituba in northern state of Para, the spokesman said. President Jair Bolsonaro's government is seeking to overhaul Brazil's poor transportation infrastructure, which raises costs and causes delays for the commodity-exporting powerhouse, by seeking private investors to operate dozens of road, rail and airport projects.

On Monday, government Secretary Adalberto Vasconcelos, who has been tasked with creating public-private infrastructure partnerships, said the country would privatize more airports and secure new investment for railways. For roadways, five concessions are slated for auction this year with a long pipeline of projects to follow, according to Freitas. BR-262/381 in the state of Minas Gerais, sometimes called the "Road of Death" because its poor condition has contributed to lethal accidents, will also be put on the privatization list next month, he said.

The Trans-Amazonian highway, officially known as BR-230, was inaugurated in the 1970s under Brazil's military dictatorship, but only a fraction of its nearly 3,000 kilometers (1,864-miles) were paved and much of the existing roadway has fallen into disrepair. It stretches from the coastal state of Paraiba deep into Amazonas state. Original plans for it to reach the border with Peru were never completed. Nevertheless, research by Brazil's space agency and academics has linked the road to a rise in deforestation, and road improvements allowing easier access deep into the Amazon have consistently led to increased deforestation nearby.

He said that major construction firms that were implicated in corruption schemes remain unable to participate in public auctions for infrastructure projects, but could act as subcontractors for winners of concession auctions. Engineering conglomerates Odebrecht SA and Andrade Gutierrez SA, both implicated in corruption schemes to fix contracts, signed leniency deals with the government admitting guilt and agreeing to cooperate, which allows them to contest government contracts. Companies linked to corruption but without such leniency deals may be subject to legal challenges.

"They are companies that have know-how, companies with engineering (ability), companies that can provide good services," Freitas said. (Reporting by Jake Spring; editing by Lisa Shumaker and Bill Berkrot)

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