Brazil moves to retender concessions

Brazil moves to retender concessions

Project & Infrastructure Finance Economy & Policy Regulation Politics Brazil

Brazil has issued a decree that allows the government to retender infrastructure concessions that have financial difficulties, including federal highways that were auctioned during the administration of former President Dilma Rousseff.

Under the decree, the government could also tender a new concession contract for Viracopos Airport. Aeroportos Brasil, which holds the current concession, field for bankruptcy in May and presented a restructuring plan last month, looking to renegotiate BRL2.88bn ($732m) in debt.

Five companies have expressed interest in acquiring the 30-year concession from Aeroportos Brasil. Zürich Airport and the private equity firm IG4 Capital even submitted a plan to take control, but they warned that they could withdraw the offer if the concessionaire does not come to a restructuring agreement by the end of the year.

Among the highways, the government could retender seven federal toll road concessions in the next two years, including BR-040 between Brasília and Juiz de Fora.

Via 040, the concessionaire for BR-040, said it has started the process to return the federal highway to the government. Invepar, an infrastructure company backed by the employee pension plans for Banco do Brasil, Petrobras and Caixa Econômica Federal, owns Via 040.

On the other roads, only MGO Rodovias, a concessionaire owned by EcoRodovias, completed the works as outlined in the contract by adding lanes to BR-050 in Goiás and Minas Gerais. Elsewhere, the government cancelled the concession contract for BR-153 in Tocantins and Goiás in August 2017 after the project sponsor, Grupo Galvão, was embroiled in corruption investigations.

The Rousseff government awarded the concessions in 2013 and 2014, calling for billions of reais in investments in the first five years. But as Brazil slipped into a recession, traffic levels declined, revenues did not meet expectations and the concessionaires racked up loads of debt. In addition, some of the concessions belonged to companies caught up in the Lava Jato investigations. Odebrecht, for example, tried to sell its stake in the concession for BR-163, but it did not find a buyer.

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