VZCZCXRO8115
RR RUEHRG
DE RUEHSO #0766/01 2571750
ZNR UUUUU ZZH
R 141750Z SEP 07
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC 7465
INFO RUEHAC/AMEMBASSY ASUNCION 3103
RUEHBR/AMEMBASSY BRASILIA 8578
RUEHBU/AMEMBASSY BUENOS AIRES 2863
RUEHCV/AMEMBASSY CARACAS 0556
RUEHLP/AMEMBASSY LA PAZ 3480
RUEHMN/AMEMBASSY MONTEVIDEO 2435
RUEHSG/AMEMBASSY SANTIAGO 2137
RUEHRG/AMCONSUL RECIFE 3779
RUEHRI/AMCONSUL RIO DE JANEIRO 8322
RUEHIN/AIT TAIPEI 0077
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL

UNCLAS SECTION 01 OF 03 SAO PAULO 000766 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/BSC, EEB/TRA/OTP, OES/PCI 
STATE PASS USTR FOR KDUCKWORTH 
TREASURY FOR JHOEK 
NSC FOR TOMASULO 
SOUTHCOM ALSO FOR POLAD 
USDOC FOR 4332/ITA/MAC/WH/OLAC 
USDOC FOR 3134/USCFS 
USAID FOR LAC/AA 
 
E.O. 12958: N/A 
TAGS: EWWT ETRD ECON SENV ELTN BR
SUBJECT: INFRASTRUCTURE IN BRAZIL: THE TIETE RIVER 
 
  Summary 
------- 
 
¶1.  (U) The Brazilian Transportation Ministry hosted the 
first Bilateral Brazil-U.S. Inland Waterways Navigation 
Conference August 28-30 in Brasilia that brought together 
experts to discuss the challenges and opportunities presented 
by inland waterways.  The U.S. delegation included 
representatives of the Coast Guard, the Army Corps of 
Engineers, and private industry.  Likewise, the Brazilian 
delegation was comprised of representatives from several 
industries and different levels of government.  The event, 
sponsored by the Brazilian National Agency for Waterway 
Transportation (ANTAQ) and USSOUTHCOM, looked at the overall 
waterborne transportation infrastructure in Brazil and 
culminated with a trip down the Tiete River in the state of 
So Paulo in order to look at the potential benefits and 
hurdles involved with improving infrastructure along this 
waterway that serves as an important  transportation link for 
agricultural producers.  While improvements in waterborne 
transportation would benefit agricultural producers, 
geographical, political, and environmental concerns combine 
to make some hard choices for the future of this waterway. 
End Summary 
 
Transportation Infrastructure in Brazil 
--------------------------------------- 
 
¶2.  (U) The combined team first looked at the overall state 
of Brazil,s waterborne transportation infrastructure by 
reviewing the most recent ANTAQ report published in 2005. 
The report outlines in detail the volume and type of goods 
that go through the country's ports.  The report indicated 
that four out of the top nine Brazilian ports, in terms of 
volume, are located in the So Paulo consular district 
(composed of the states of Sao Paulo, Matto Grosso do Sul, 
Parana, Rio Grande do Sul, and Santa Catarina).  These ports 
include Santos and Sao Sebastiao in Sao Paulo state, 
Paranagua in Parana, and Rio Grande in Rio Grande do Sul, and 
the report cited the Tiete River as the primary inland 
waterway used to transport goods to these four ports.  While 
these ports move a large percentage of total Brazilian 
exports (the top nine ports together handles over 82% of 
Brazilian exports in 2005, and Santos alone accounts for 
about one fourth of Brazil's trade and 40 percent of 
merchandise moved by container), weak port infrastructure has 
been a drain on the growth of exports from these ports and 
represents a considerable cost of doing business in Brazil. 
 
¶3.  (U) Transportation infrastructure development faces a 
number of challenges.  While there is general agreement that 
infrastructure deficiencies impede Brazil's competitiveness, 
development of roads, railways, ports, and waterways remains 
controversial for environmental and other reasons.  For 
instance, major projects such as the proposed construction of 
two hydroelectric dams on the Madeira River along the border 
with Bolivia in the Amazon region have been slowed by 
environmental licensing requirements as well as cross-border 
concerns with Bolivia.  Brazil's environmental licensing 
agency, IBAMA, has denied permits to other proposed dam 
construction projects to the point that President Lula 
himself has expressed impatience with Environment Minister 
Marina Silva and IBAMA.  Environmental scrutiny has thus 
slowed river construction across the board and has brought 
much negative attention to the impact of dam construction. 
At the same time, the Lula administration's Growth 
Acceleration Program (PAC), a multi-year public works program 
designed to advance economic development by promoting 
 
SAO PAULO 00000766  002.2 OF 003 
 
 
incentives for infrastructure expansion, has helped make 
commercial transportation development a hot topic in Brazil. 
Due to this attention, investors are becoming interested in 
financing major construction projects.  The PAC calls for a 
"multi-modal" transportation system designed to help move 
goods to port and market.  As a result, inland waterway 
transportation has grown in significance, giving 
encouragement to prospective investors. 
 
¶4.  (U) Waterway transportation has proven to be much more 
cost-effective than transporting goods on roads, the common 
practice in Brazil.  It costs $100 to transport a ton of soy 
beans - Brazil's powerhouse crop - by truck from the interior 
where they are grown to the Port of Santos for export.  Use 
of waterborne transportation would reduce transportation 
costs.  One river barge can hold 400 truckloads of soy beans 
reducing the cost per ton of soy bean transported to 30 
dollars.  Currently, up to one million tons of bulk 
agricultural products, representing 25% percent of total 
Brazilian agricultural exports, are taking advantage of the 
lower transportation costs of waterways like the Tiete a 
figure that could increase with further development. 
 
The Tiete, a Case Study 
----------------------- 
 
¶5.  (U) One of Brazil's largest inland waterways, the Tiete 
River is highly developed for the transportation of bulk 
agricultural products.  The Tiete flows northwest across Sao 
Paulo state for about 1150 km before emptying into the Parana 
River, which in turn flows southwards to the Rio de La Plata 
estuary.  The Tiete's source is located in the municipality 
of Salesopolis in Serra do Mar, only 22km from the Atlantic 
Ocean, but the geography of the area forces the river to run, 
anomalously, towards the center of the continent.  A total of 
seven dams have been constructed along the river with each 
dam containing a lock that makes navigation possible.  By the 
time it reaches the sea, the Tiete-Parana waterway is 3,900 
km long. 
 
¶6.  (U) The use of the river for transportation has not come 
without an environmental and social impact on the interior of 
Sao Paulo and its inhabitants.  In 1992, residents of 
Guarapiranga pressured the state government into trying to 
reverse the damage to the river caused by the dams and 
artificial lakes.  With funding from the Inter-American 
Development Bank, the state launched a program entitled 
"Projeto Tiete" to respond to these concerns.  The purpose of 
the project is to treat the wastewater that pollutes the 
river.  (Note: The municipality of Guarulhos continues to 
discharge waste into the river, which is noticeably 
malodorous as it passes through metropolitan Sao Paulo.  End 
Note.)  The program also focuses on monitoring the industries 
in the vicinity of the river.  At present, 1,200 industries 
have agreed not to discharge their waste into the river and 
similar programs are being designed to address issues of 
transportation and construction of dams on the river. 
 
¶7.  (U) ANTAQ is currently re-assessing a 1975 research 
project proposing a series of 16 dams above Barra Bonita - 
about 300 km west-northwest of Sao Paulo - to enable barges 
to carry cargo from further up the Tiete toward port.  To 
date, while a series of locks and dams exist below (west of) 
Barra Bonita, no dams have been constructed above Barra, and 
only two appear viable.  Engineers argue that the other 
fourteen proposed dams are too costly and difficult to 
construct given the significant elevation changes along the 
part of the river between Barra Bonita and Piracicaba. 
 
SAO PAULO 00000766  003 OF 003 
 
 
According to engineers' assessments of the 1975 study by the 
Secretaria de Transportes, the most viable of the proposed 
 
SIPDIS 
dams are the Barragem de Tiete and the Barragem Porto Feliz. 
These are the two proposed dams in closest proximity to the 
Barra Bonita dam.  Construction of these two dams would 
significantly extend the distance by which goods can be 
transported along the river, reducing the distance products 
would have to be transported by road and thus reducing costs. 
 Other potential options include making significant 
structural changes on the existing dams; however this would 
be extremely costly and controversial.  It would also involve 
widening and deepening the Tiete River, a process that proved 
to be very unpopular when proposed under the state government 
of Geraldo Alckmin in 2004. 
 
¶8.  (U) Differing geographical and institutional conditions 
between Brazil and the United States help explain why Brazil 
today faces many more challenges in developing waterway 
transportation mechanisms than the United States did in an 
earlier era.  According to the American engineers, dam 
construction in the U.S. was facilitated by a lack of 
environmental scrutiny at the time of construction.  In 
addition, because Brazilian rivers such as the Tiete are 
characterized by large and sudden differences in elevation, 
engineers must build high dams with very narrow openings to 
hold back the large quantities of water.  U.S engineers, 
impressed by the quality of construction at Barra Bonita, 
commented that these physical constraints dictate a need for 
more expenditure on repairs and maintenance than a comparable 
dam in the United States would require.  The narrow openings 
limit the entry of only a few barges at a time, lined up one 
after another.  The average width for a lock in Brazil is 12 
meters, whereas the average in the U.S. is 35 meters.  Thus, 
in the U.S., barges enter locks not only one after another 
but also side by side, often increasing the number of barges 
transported at one time threefold.  One alternative might be 
to employ individuals who captain single-propelled vessels, 
as is done in Europe, instead of following the U.S. model of 
using tow boats and barges.  However, Brazilian industries 
that use the Tiete to transport their goods all have very 
integrated business models.  Each farm and processing plant 
controls not only its operations but also transportation and 
other logistics instead of contracting out for these services. 
 
Comment 
------- 
 
¶9.  (U) Construction of two additional dams along the Tiete 
River would significantly reduce the transportation costs for 
the country's major agricultural producers.  To achieve the 
greatest impact, this would have to occur in tandem with the 
development of Sao Paulo's railroads as is proposed by the 
PAC's "multi-modal" transportation system.  Geographic 
barriers, institutional hurdles, and environmental concerns, 
however, will continue to factor highly in the development of 
Brazil's waterway infrastructure for both transportation and 
other purposes.  End Comment. 
 
¶10.  (U) This cable was coordinated with Embassy Brasilia. 
 
WHITE