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Brazil: Infrastructure projects up for bid

As the Brazilian presidential mandate enters the 'lame-duck' period, the federal government's ambitious programme of infrastructure projects is now focused mainly on two calls for bids: one for the highway concession in Rio Grande do Sul State and the other for a group of airport concessions. These calls for bids involve a mixture of innovations that have been long waited by investors, and a few last-minute decisions that are yet to be proven adaptable in practice.

For the concession of the Rio Grande do Sul highway, the call for bids incorporated new and welcome practices to attract international investors. For example, procurement documents were made available in Portuguese and English, and administrative obstacles regarding international bidders' accreditation were reduced. Concessionaires will need to put strong corporate governance in place and adopt policies on related parties' transactions.

The federal government has also proposed changes in the requirements for winning bidders. The winning bidder will be the one who submits the lowest toll fare, however the sponsors will be required to inject additional equity into the concessionaire for each percentage point of discount to the tariff from the outset of the concession. This requirement aims to incentivise sustainable proposals. Investments in new interventions (duplications or additional lanes) will be triggered upon minimum measurements of traffic, and new investments not provided for in the contract may only be included at the point of the periodic reviews, every five years.

On the other call for bids, the federal government has offered to concession three baskets of regional airports: four in the Mato Grosso state, five in the northeast and two in the southeast. Each basket of airports will be awarded to one group of investors. Companies may participate in different consortia for each of the baskets. Previous airport concessions have already attracted international investors and operators. This will be the second round under President Temer's government: the previous round was awarded to investors who assumed the regional airports of Florianopolis, Fortaleza, Salvador and Porto Alegre.

Since the market share of the airports offered in the new round is less relevant than the previous rounds, the federal government has adopted a less rigorous tone in regulation: it will adopt international standards for the price of services at the airport, but the operator will have room to adjust the prices of different services with users and airlines.

The tender documents for the Rio Grande do Sul highway are available online at the National Agency for Territorial Transportation. The bidding session will take place on November 1 2018. The federal government expects to publish the call for bids for the airports and to hold the bidding session before the end of the year.

Francisco de
Andrade Figueira

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