Construction cartels marring Brazil 2014 preparation

By Simon J. Mone

WITH just 84 days left for the FIFA World Cup being hosted by Brazil to get under way, on-going work to complete the construction of 13 airports, seven ports and 37 transport projects and the building/refurbishment of 12 stadia for the 2014 World Cup leaves a lot to be desired.

Although the Brazilian government had nearly seven years to prepare after winning the bid to host the tournament in 2007, four stadia are still under construction, and work outside many venues is far from finished. Airport construction most probably will not have been fully complete.

Ports, transportation facilities and many urban projects initially expected to be ready for the World Cup have not yet been finished. Doubts also remain about whether host cities will meet FIFA's requirements for the provision of fan areas with outdoor viewing screens.

Only six of the 12 stadia were completed by the 2013 deadline. Two of these may be ready only less than a month before the World Cup begins, including the Sao Paulo site that will stage the opening match between host Brazil and Croatia.

According to reports, construction costs at Mane Garrincha stadium in Brasilia and Maracana stadium in Rio de Janeiro have more than doubled since 2010 as a total of Brazilian Real $2.9b or $1.3b has been spent. These two stadia alone have so far utilised more than the original $1.1b for the entire FIFA World up stadia estimates.

It is reported that by May 2012, about 41% of works for the World Cup had not yet begun prompting government to change procedures for the approval of projects with an ‘exceptionality status’ created to speed up approvals of World Cup infrastructure projects.

Construction companies took advantage of the situation and fixed bidding costs way beyond actual costs owing to their collusive practices. As a result, project costs went up.

Such occurrences are not only seen in World Cup related construction projects but also other infrastructures, supplies and services. For the case of South Africa, which hosted the 2010 FIFA World Cup, stadia construction costs alone increased by 1008%.

This arose partly from collusion and also because of South Africa’s vulnerability to the 2008 and 2009 Global credit crunch. For Brazil’s case, World Cup stadia costs already increased by 327% by the end of 2013 and further increases are anticipated as the Brazil government tries hard to complete those projects in time for the June 12, 2014 kick-off.

In order to ensure damage control, the Brazilian government should immediately follow the example set by the Competition Commission of South Africa which investigated construction cartels.

It instituted a tribunal that found some construction companies guilty of lobbying for contracts. Such companies were handed hefty fines for indulging in illegal construction related lobbying.

The July 17, 2013 tribunal of the Competition Commission of South Africa found out that construction companies made abnormal profits estimated at Rands 4.7 billion ($1b) during preparation for the 2010 FIFA World Cup. Such companies were then fined Rands 1.5 billion ($338m).

The writer is a civil engineer