Business Monitor International


Venezuela Infrastructure Report

Published 06 January 2014

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Venezuela Infrastructure Report

BMI View: We have revised down our forecasts to reflect a more aggressively deteriorating environment in Venezuela's construction sector. Although we anticipated a substantial decline in industry growth in 2013, we are now estimating a recession for the year, which we believe will persist until 2015. High input costs, a weakening government fiscal position and an unattractive environment for private investors mean there will be few sources of growth for the industry until fundamental economic and political changes take place.

As anticipated, 2013 has been the start of a steep deceleration in growth in Venezuela's construction industry. We are now estimating a contraction of 3.9% for the year, and we believe negative growth will persist through to 2015 (-2.1% in 2014, and -0.6% in 2015). A slimming project pipeline in the infrastructure sector, partly due to growing fiscal pressure on the government, will see current major projects draw to a close with few new on the horizon. Growth is also being eroded by a scarcity of inputs and high costs. However, we anticipate that the government will continue to prioritise social spending programmes including the Great Housing Mission (GMVV).

Key updates from our 2014 outlook:

  • Extremely high inflation in the construction sector will persist. For the first ten months of 2013, construction industry inflation has averaged 40%, hitting 67% in October 2013. High costs are related to a scarcity of inputs. Capacity utilisation at the country's steel and cement plants is very low, leading to a shortage in basic building materials. A shortage, combined with expensive imports, is eroding real growth, but driving a substantial expansion in nominal industry value - leading to a distortion in industry data. We are factoring in above 20% inflation through to 2017.

  • Our muted outlook for the economic and political environment in Venezuela is weighing on our expectation of both government ability to invest in infrastructure and private...

Table of Contents

BMI Industry View
5
SWOT Analysis
7
Venezuela Infrastructure Industry SWOT
7
Market Overview
8
Building Materials
10
Latin America
10
Industry Forecast Scenario
15
Table: Venezuela Construction And Infrastructure Industry Data, 2010-2016
15
Table: Venezuela Construction And Infrastructure Long Term Forecasts, 2015-2021
15
Construction And Infrastructure Forecast Scenario
16
Major Projects Table - Transport
21
Table: Major Projects - Transport
21
Major Projects Major Projects Table - Energy And Utilities
24
Table: Major Projects - Energy And Utilities
24
Residential/Non- Residential Construction And Social Infrastructure
26
Major Projects Table - Residential/Non-Residential Construction And Social Infrastructure
27
Table: Major Projects - Residential/ Non-Residential Construction And Social Infrastructure
27
Risk/Reward Ratings
28
Venezuela's Risk/Reward Ratings
28
Rewards
28
Risks
28
Regional Overview
29
Table: Americas Infrastructure Risk/Reward Ratings
35
Company Monitor
36
Odebrecht
36
Otepi
39
Global Overview
41
Methodology
48
Industry Forecasts
48
Construction Industry
48
Data Methodology
49
Construction
49
Capital Investment
50
Construction Sector Employment
50
Infrastructure Business Environment Rating
51
Table: Infrastructure Business Environment Indicators
52
Project Finance Ratings
53
Table: Design And Construction Phase
54
Table: Commissioning And Operating Phase - Commercial Construction
55
Table: Commissioning And Operating Phase - Energy And Utilities
56
Table: Commissioning And Operating Phase - Transport
57
Sources
58

The Venezuela Infrastructure Report features Business Monitor International (BMI)'s market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.

BMI's Venezuela Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the Venezuelan infrastructure and construction industry.

Key Benefits

  • Benchmark BMI's independent infrastructure industry forecasts for Venezuela to test other views - a key input for successful budgetary and planning in the Venezuelan infrastructure market.
  • Target business opportunities and risks in the Venezuelan infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in Venezuela.
  • Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).

Coverage

BMI Industry View

Summary of BMI's key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant multinational and national company developments.

These are broken down into Construction (social, commercial and residential), Transport (roads, railways, ports, airports etc), and Energy & Utilities (powerplants, renewable projects, pipelines and so on).

Industry Trends

Analysis of latest projects across the infrastructure sector (covering the transport, utilities and commercial construction sub-sectors) - including:

Market Overview:Analysis of the key elements driving developments, including evaluations of current capacity and future requirements.

Building Materials Overview

The building materials overview provides industry trend analysis on the global and regional demands for building materials and the impact of this on the emerging and developed markets.

Business Environment Rankings

BMI's Infrastructure Business Environment Rankings provide a country-comparative Risk-Reward Rankings index aimed at investors (construction companies, suppliers and partners) in the regional infrastructure market.

The rankings methodology makes sophisticated use of over 40 industry, economic and demographic data point.

Industry SWOT Analysis

Analysis of the major Strengths, Weaknesses, Opportunities and Threats within the infrastructure and construction sectors and within the broader political, economic and business environment.

BMI Industry & Economic Forecasts

Historic data series (2008-2012) and forecasts to end-2018 for all key industry and economic indicators, supported by explicit assumptions, plus analysis of key risks to the main forecast. Indicators include:

Construction: Industry value (US$bn); contribution to GDP (%); employment (`000); real growth (%).

Infrastructure: Value (US$bn); contribution to construction industry (%); real growth (%) of transport infrastructure (broken down by railways, airports, roads and bridges, ports and harbours) and energy and utilities (broken down by power plants and transmission grids, oil and gas pipelines, and water infrastructure).

Economy: Economic growth (%); nominal GDP (US$bn); unemployment (%); interest rates (%); exchange rate (against US$).

Company Profiles

Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI's industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.

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Testimonials

'An essential, multi-faceted research tool. BMI’s thorough understanding of the major market players enables an informed – and informative – review of the sector’s actual performance, together with useful insights into current industry issues, which are topped-off with detailed and invaluable forecasts of industry and macroeconomic trends.’

Senior Research Analyst, ABC International Bank plc