Road Infrastructure
Road Infrastructure
Business Model Description
Invest in paving and maintenance of roads (whether in rural or urban areas) for vehicles and people, as well as tunnels, bridges and associated road infrastructure through public-private partnerships such as concessions or other models.
Expected Impact
Increase connectivity both physical and digital throughout the country, leading to economic and social development.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Paraguay: Alto Paraná
- Paraguay: Cordillera
Sector Classification
Infrastructure
Development need
Needs persist in sanitation, housing, waste management and transport infrastructure. Improved sanitation reaches 50% of homes and the case of improved water to 79%. The housing deficit affects a significant swath of the population, as there is a current deficit of 800,000 homes. In terms of solid waste, most of the waste generated at the national level is not managed (I).
Policy priority
Infrastructure is one of the most important aspects of development policies, and Paraguay demonstrates this through the following policies: the Institutional Strategic Plan of the Ministry of Public Works and Communications (II), and the Master Plan of Transport 2013 (III)
Gender inequalities and marginalization issues
gender inequality in access to infrastructure is notable, especially in rural areas. Women face significantly lower rates of economic activity and labor market participation compared to men. In addition, women in rural areas live in vulnerable working conditions and without access to social security (IV).
Investment opportunities introduction
the main areas of investment opportunities were identified to address gaps in the sector, including: solid waste management, affordable housing, road and river infrastructure, and wastewater management (V).
Key bottlenecks introduction
due to the current infrastructure deficit, Paraguay presents High investment requirements on infrastructure deployment, approximately US$2.8 billion annually (VI).
Infrastructure
Development need
Needs persist in sanitation, housing, waste management and transport infrastructure. Improved sanitation reaches 50% of homes and the case of improved water to 79%. The housing deficit affects a significant swath of the population, as there is a current deficit of 800,000 homes. In terms of solid waste, most of the waste generated at the national level is not managed (I).
Policy priority
Infrastructure is one of the most important aspects of development policies, and Paraguay demonstrates this through the following policies: the Institutional Strategic Plan of the Ministry of Public Works and Communications (II), and the Master Plan of Transport 2013 (III).
Gender inequalities and marginalization issues
gender inequality in access to infrastructure is notable, especially in rural areas. Women face significantly lower rates of economic activity and labor market participation compared to men. In addition, women in rural areas live in vulnerable working conditions and without access to social security (IV).
Investment opportunities introduction
the housing deficit affects a significant swath of the population, with the supply of social housing being insufficient, as there is a current deficit of 800,000 homes (VIII).
Engineering and Construction Services
Pipeline Opportunity
Road Infrastructure
Invest in paving and maintenance of roads (whether in rural or urban areas) for vehicles and people, as well as tunnels, bridges and associated road infrastructure through public-private partnerships such as concessions or other models.
Business Case
Market Size and Environment
The vehicle fleet, currently at 1.2 million vehicles, will increase to 4.5 million (3).
> The total road network is 75,120 km. The paving index is only 11% of the total network, that is, there is a paving need of 89% (3).
> Vehicle traffic will grow 5.6% per year. This will determine that the flow of vehicles will grow 113% until 2030 and 254% towards 2040. The vehicle fleet, currently at 1.2 million vehicles, will increase to 4.5 million (3).
Indicative Return
15% - 20%
> According to the feasibility study of the Project to expand and duplicate the National Routes 2 Mariscal José Félix Estigarribia and 7 Dr. José Gaspar Rodríguez de France Tramo Ypacaraí- Coronel Oviedo the TIR is 17.88% and 17.21% (4).
Investment Timeframe
Long Term (10+ years)
> The period of roads 2 and 7's public tender PPA was 30 years (5).
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Impact Case
Sustainable Development Need
The transport sector requires investments in road infrastructure, to achieve its expansion and maintenance (3).
From the road point of view, 15% of the paved roads are severely deteriorated and only 30% of the rural roads are under some conservation or improvement program (1).
On land roads, the inefficiencies detected reached 27.5%, where the delays in the Paraguay-Brazil border crossing and the losses in products mainly associated with shortcomings in rural road infrastructure are the issues that most affect these cost overruns (6).
Gender & Marginalisation
Unequal access to road infrastructure in rural areas.
Expected Development Outcome
> Increase access to basic services and connectivity with different markets and businesses.
> Facilitate logistics for industries.
> Reduce travel time and associated costs between cities.
Gender & Marginalisation
> Increase access to rural and remote areas.
Primary SDGs addressed
11.2.1 Proportion of population that has convenient access to public transport, by sex, age and persons with disabilities
9.1.1 Proportion of the rural population who live within 2 km of an all-season road
9.1.2 Passenger and freight volumes, by mode of transport
9.c.1 Proportion of population covered by a mobile network, by technology
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Indirectly impacted stakeholders
Corporates
Outcome Risks
> Construction and transit in new areas could result in an invasion and decrease of wildlife in rural places (7).
> Water pollution and increased mud and dust due to construction (7).
> Potential relocations of family homes, depending on the location and the infrastructure to be carried out (8).
> Loss of land tenure since real estate may be required from families for road projects (8).
Impact Risks
Execution Risks: > Low population density, and therefore a lower return on investment, especially in the farthest areas (9).
Stakeholder risks: > Aversion of investors to investments with such alliances (PPA)
External risks: > opposition of nearby populations by evictions, externalities, etc.
Unexpected risks: > Specific regulations that limit scalability
Gender inequality and/or marginalization risk: (enter text)
Impact Classification
What
The result is likely to be positive because the construction and improvement of road infrastructure can contribute to the economic development
Who
Populations that have land transportation and companies that mainly use land transportation
Risk
Low population density in rural areas could limit profitability to extend road infrastructure
Impact Thesis
Increase connectivity both physical and digital throughout the country, leading to economic and social development.
Enabling Environment
Policy Environment
The National Development Plan 2030 - has as one of the transversal lines of axis II (Inclusive economic growth) is competitiveness and innovation: It combines inclusive economic growth with efficient and transparent public management (10).
The Institutional Strategic Plan of the Ministry of Public Works and Communications - has among its lines of action to increase coverage in road infrastructure and services (11).
Transportation Master Plan 2013 - was prepared in order to promote the ordering in the short, medium and long term of the development of infrastructure, transport and logistics services (12).
Financial Environment
Financing AFD PROINFRA - Financing for the acquisition of machinery to be used in infrastructure projects. Financia:- Road works and communications: routes ports, airports, bridges, viaducts, among others (16).
The IDB credit of $235 million, granted under the global multi-works program modality, has a repayment period of 25 years, a grace period of 7 and a half years, and an interest rate based on Libor (17).
Law 5102/13 provides incentives to private proponents of initiatives: Once the award has been made, reimbursement of accepted costs linked to the previous studies, bonus 3 to 10% of the score obtained with your offer (13).
Regulatory Environment
Law No. 5102 "Promotion of investment in public infrastructure and expansion and improvement of goods and services by the state "- establishes norms and mechanisms to promote, through public-private participation, investments in public infrastructure (13).
Law No. 2148 creates the Paraguayan Road Infrastructure System (SIVIPAR), the regulatory body responsible for all roads, routes, highways, and highways that are part of the National Road Network (14).
Law No. 5074/13 Turnkey Law - That modifies and expands Law No. 1,302 / 98 "That establishes special and complementary modalities and conditions to Law No. 1,045 / 83 That establishes the Public Works regime (15).
Marketplace Participants
Private Sector
OCHOA (Paraguay), Cavialpa (Paraguay), Construpar (Paraguay), Engineering (Paraguay)
Government
Ministerio de Obras Públicas y Comunicación (MOPC), Ministerio de Industria y Comercio (MIC), Municipalidades departamentales, Secretaría Técnica de Planificación (STP)
Multilaterals
BID, UE, USAID, Banco de Desarrollo de América Latina (CAF), Banco Mundial (BM)
Public-Private Partnership
Route 1 and 7 PPA
Target Locations
Paraguay: Alto Paraná
Paraguay: Cordillera
References
- (I) PNUD. 2023. Asunción Sustentable, un proyecto transformador que mira hacia el futuro. https://www.undp.org/es/paraguay/noticias/asuncion-sustentable-un-proyecto-transformador-que-mira-hacia-el-futuro (II) Ministerio de Obras Públicas y Comunicaciones. 2014. Plan estratégico. https://www.mopc.gob.do/nosotros/plan-estrat%C3%A9gico/ (III) Gobierno Nacional de Paraguay. 2020. Actualización del plan maestro de infraestructura y servicios de transporte del Paraguay 2018 - 2028. https://www.mopc.gov.py/application/files/3816/3302/7534/Actualizacion_del_Plan_Maestro_de_Infraestructura_y_Servicios_de_Transporte_del_Paraguay_2018_-_2028_-_Informe_Final.pdf (IV) ONU Mujeres. s.f. Paraguay. https://lac.unwomen.org/en/donde-estamos/paraguay (V) Infraestructure Interviews. 2021. (VI) Marketdata. 2022. Paraguay debe invertir el 6% del PIB hasta el 2030 para cerrar brecha en infraestructura. https://marketdata.com.py/noticias/paraguay-debe-invertir-el-6-del-pib-hasta-el-2030-para-cerrar-brecha-en-infraestructura-89777/ (VII) MF Paraguay. 2022. Informe inmobiliario: Déficit, oferta, demanda y financiamiento. https://mf.com.py/medios/blog/informe-inmobiliario-deficit-oferta-demanda-y-financiamiento.html (VIII) Gobierno del Paraguay. 2014. Plan Nacional de Desarrollo Paraguay 2030. https://www.stp.gov.py/pnd/wp-content/uploads/2014/12/pnd2030.pdf
- (1) Ministerio de Obras Públicas y Comunicaciones & Banco Interamericano de Desarrollo. 2020. Actualización del Plan Maestro de Infraestructura y Servicios de Transporte del Paraguay. https://www.mopc.gov.py/application/files/3816/3302/7534/Actualizacion_del_Plan_Maestro_de_Infraestructura_y_Servicios_de_Transporte_del_Paraguay_2018_-_2028_-_Informe_Final.pdf
- (2) Agencia de Cooperación Internacional del Japón. s.f. Movimiento del flujo de tráfico vial. https://openjicareport.jica.go.jp/pdf/11831740_02.pdf
- (3) Roberto Agosta et al. 2020. Análisis de inversiones en el sector transporte terrestre interurbano latinoamericano a 2040. https://scioteca.caf.com/bitstream/handle/123456789/1537/Paraguay_Analisis_de_Inversiones_en_el_Sector_de_Transporte_Interurbano_Terrestre_Latinoamericano_al_2040.pdf?sequence=17&isAllowed=y
- (4) Mariscal José Félix Estigarribia y Dr. José Gaspar Rodríguez de Francia. 2015. Proyecto de ampliación y duplicación de las Rutas Nacionales 2. http://snip.hacienda.gov.py/normativas/dictamen_factibilidad_rutas_2_y_7.pdf
- (5) Sub Secretaria de Estado de Economía. 2015. MOPC nº 156/2015. https://www.contrataciones.gov.py/documentos/download/licitacion_no_regulada_ley_2051/Sx6rdFRSMJI%25253D
- (6) Blas Rozadilla. 2019. Paraguay: una economía potenciada desde el agro (parte I). https://www.bcr.com.ar/es/mercados/investigacion-y-desarrollo/informativo-semanal/noticias-informativo-semanal/paraguay-una
- (7) Adnan Enshassi et al. 2014. Evaluación de los impactos medioambientales de los proyectos de construcción. https://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0718-50732014000300002
- (8) Ministerio de Industria y Comercio. 2019.
- (9) Datosmacro. s.f. Paraguay. https://datosmacro.expansion.com/paises/paraguay
- (10) Gobierno del Paraguay. 2014. Plan Nacional de Desarrollo Paraguay 2030. https://www.stp.gov.py/pnd/wp-content/uploads/2014/12/pnd2030.pdf
- (11) Ministerio de Obras Públicas y Comunicaciones. 2014. Plan estratégico. https://www.mopc.gob.do/nosotros/plan-estrat%C3%A9gico/
- (12) Gobierno Nacional de Paraguay. 2020. Actualización del plan maestro de infraestructura y servicios de transporte del Paraguay 2018 - 2028. https://www.mopc.gov.py/application/files/3816/3302/7534/Actualizacion_del_Plan_Maestro_de_Infraestructura_y_Servicios_de_Transporte_del_Paraguay_2018_-_2028_-_Informe_Final.pdf
- (13) Congreso de la nación paraguaya. 2013. Ley No. 5102. https://www.bacn.gov.py/leyes-paraguayas/4669/promocion-de-la-inversion-en-infraestructura-publica-y-ampliacion-y-mejoramiento-de-los-bienes-y-servicios-a-cargo-del-estado
- (14) Congreso de la nación paraguaya. 2015. Ley No. 2148. https://www.bacn.gov.py/leyes-paraguayas/3871/ley-n-2148-crea-el-sistema-de-infraestructura-vial-del-paraguay
- (15) SNIP. s.f. Financiamiento alternativo de inversión pública. http://snip.hacienda.gov.py/Snip_Web/portal/financiamiento.html#:~:text=%2D%20Ley%20N%C2%BA%205074%2F13%3A,%22Proyectos%20Llave%20en%20Mano%22.
- (16) Agencia Financiera de Desarrollo. S.F. Acerca de la AFD. https://www.afd.gov.py/que-es-la-afd
- (17) La Nación. 2020. BID concede préstamo de US$ 235 millones para mantener la red vial agroindustrial. https://www.lanacion.com.py/negocios/2020/11/26/bid-concede-prestamo-de-us-235-millones-para-mantener-la-red-vial-agroindustrial/