Brazil Unveils $10 Billion Infrastructure Budget For Rio Olympics

[April 17, 2014]  By Pedro Fonseca

RIO DE JANEIRO (Reuters) — Brazilian authorities unveiled an infrastructure budget of 24.1 billion reais ($10.76 billion) for the Rio 2016 Olympic Games, 25 percent more than planned, as they try to reassure the world they can deliver facilities on time.

The budget covers 27 projects in urban development and public transport, including 8 billion reais for a newly added fourth metro line for Rio, Brazil's congested second largest city, where getting around town is an ordeal.

Other initially envisaged projects were excluded, such as the upgrade to Rio's international airport Galeao, which has been handed to private operators.

Rio Mayor Eduardo Paes said the higher budget was due to the inclusion of new projects and inflation, which has blown up costs by 30 percent since Rio won hosting rights for the event in 2009.

Paes said 57 percent of the infrastructure costs would be paid for with public funds, coming from federal, state and municipal governments, and the rest would be private.

The total cost of Rio 2016 has risen to 36.7 billion reais, which does not include more than half of the 52 projects or facilities that will be used exclusively for the games and still require approval.

So far, only 24 projects have been budgeted at 5.6 billion reais. Additionally, the organizing committee's budget has risen 27 percent to 7 billion reais.

This operating budget was originally set to include up to 1.4 billion reais in public funds but officials changed their minds in response to public outcry over the high cost of stadiums and other projects required by the Olympics and 2014 World Cup, which kicks off in June.

SLOW PACE

The Rio 2016 organizing committee estimated in 2009 that the games would cost 28.8 billion reais in total.

With just over two years to go, the International Olympic Committee and world sporting federations last week criticized the Brazilian government for the slow pace of work, and some asked about contingency plans should Brazil fail to deliver.

Construction work at the Deodoro Olympic Park, where eight events will take place, has yet to start, and the pace of progress at other venues is slow.

The terms of the tenders for Deodoro would be published on Thursday and work was scheduled to start in the second half of this year, Brazilian officials said.

"We have no room to spare with Deodoro. We cannot make a single mistake here. But there is still time to get it done," Paes said at the budget announcement, flanked by Brazil's Sports Minister Aldo Rebelo.

Competitors have criticized the filthy waters where sailing events will take place in Rio's Guanabara Bay, yet the budget for infrastructure includes little work to clean up pollution in the bay.

A strike over pay at the Olympic Park in coastal Barra da Tijuca, one of the main venues, continued on Wednesday. Some employees returned to the construction site but union leaders convinced them not to work.

Mayor Paes said the facility, originally built for the 2007 Pan American Games, was still "on schedule".

Brazil is racing to finish soccer stadiums in time for the World Cup, a prestigious event its leaders hoped would signify the South American nation's emergence as a world power but now risks being an international embarrassment that could get worse if the Rio Olympics are similarly troubled.

($1 = 2.2388 reais)

(Additional reporting by Rodrigo Viga Gaier and Anthony Boadle; editing by John O'Brien)

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