Brazil alters investment demands for airport concessions

Wednesday, October 19, 2016

Brazil's federal government has changed the investment requirements for its upcoming international airport concessions, which are expected to be auctioned off by 1Q17.

Four tenders are scheduled, including a 25-year concession in Rio Grande do Sul state capital Porto Alegre (pictured), and 30-year concessions in the state capitals of Fortaleza (Ceará state), Florianópolis (Santa Catarina) and Salvador (Bahia).

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While the minimum overall investment for all four airports has been increased to 6.53bn reais (US$2.06bn) from 4.7bn reais (a hike of 1.83bn reais), the minimum overall canon payment for the four has been cut to 2.91bn reais from 4.1bn reais (a 1.19bn-real reduction), local news service O Globo reported.

Also, only 25% of the canon payment is due up front, while the remaining 75% is due by the 10th year of the concession. A five-year grace period has also been allowed for the second and subsequent payments.

The winning concessionaires will also have to make a variable annual payment equivalent to 5% of gross revenue, according to the report.

Salvador international airport (CREDIT: SAC).

The concessions fall under the national infrastructure program, Crescer, which also includes upcoming contracts for railways, highways, port terminals, oil fields, electric energy and waterworks.

By 1Q17, two port terminals and oil and energy projects should also be auctioned and, by the end of 2017, tenders for highways, railways, waterworks and other oil and energy projects are expected to take place.