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)
Copyright © 2014, Reuters

 

RIO DE JANEIRO (AP) — Brazilian government officials announced Wednesday that almost $11 billion (24.1 billion Brazilian reals) will be spent on major transportation and environmental projects, which they argue are not related to holding the 2016 Rio de Janeiro Olympics.

Officials say the money in the so-called "legacy" budget would have been spent without the Olympics. Officials said 57 percent is public money with rest coming from the private sector.

This is the third budget announcement in three months with government and Olympic officials unveiling them in a stream of smaller chunks.

Brazil is bracing for protests during the upcoming World Cup, which opens in two months. Any anger will focus on lavish spending for football tournament — about $11 billion — compared with high taxes and poor schools and hospitals.

Rio Mayor Eduardo Paes, who dominated Wednesday's announcement, argued the spending would benefit ordinary Cariocas, which is how Rio residents are known. He also suggested Rio would be rejuvenated the way Barcelona was by the 1992 Olympics, a comparison many question.

Paes also took a shot at the lavish spending of $40 billion on 2008 Beijing Olympics.

"We're not going to build a Bird's Nest in Rio de Janeiro," Paes said, referring to Beijing's 90,000-seat stadium that now sits largely vacant. "If you go to Beijing today the Bird's Nest has become a mausoleum to honor wasted public money. We are not going to do this here."

The Rio games have been plagued by delays and holdups over what level of government pays for what.

The budget announcement came as 2,300 construction workers remained off the job Wednesday in a two-week strike at the Olympic Park, the main cluster of venues located 25 kilometers (15 miles) west of Rio's Copacabana beach area.

Several IOC members lambasted Rio's preparations last week at the SportAccord conference in Turkey, saying the games were more poorly organized than the 2004 Athens Olympics — the benchmark for delays.

IOC President Thomas Bach declined to rule out the possibility of moving the games, and few think it will happen. However, the IOC is keeping the pressure on, sending Gilbert Felli, the IOC's executive director of the Olympic Games, to Rio to serve as the point man.

Unveiling the $10.8 billion budget for big-ticket items comes after two separate budgets were announced in January.

The Rio Olympic organizing committee in January said its operating budget would be $3.1 billion (7 billion reals). This is the money for operating the games themselves. Income is from the Switzerland-based International Olympic Committee, and from marketing, tickets sales and local sponsorship sales.

A third budget was also announced in January: $2.5 billion (5.6 billion reals) to build about half of all the infrastructure projects needed specifically for the games. This number will rise and is to be updated every six months.

The IOC requires that host cities and governments cover any deficit.

A recent study by Said Business School at Oxford University of Olympic Games since 1960 showed each one has had cost overruns.

"The games overrun with 100 percent consistency," authors Bent Flyvberg and Allison Stewart wrote. "No other type of megaproject is this consistent regarding cost overrun."

They concluded: "The data thus show that for a city and nation to decide to host the Olympic Games is to take on one of the most financially risky type of megaproject that exists, something that many cities and nations have learned to their peril."

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Filipe de Almeida of AP partner agency SNTV contributed to this report.

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