Hold your horses on re-tendered Brazil infra concessions

- Thursday, October 13, 2016

Hold your horses on re-tendered Brazil infra concessions

Despite the fact that a number of infrastructure concession holders are complaining about low revenues due to Brazil's recession and some are on the brink of canceling their contracts, re-launching tenders could take some time, according to local logistics expert Paulo Resende.

"Instead, concessionaires will try as hard as possible to hold on to their contracts," Resende told BNamericas.

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Brazil is striving to satisfy its need for better infrastructure and this creates opportunities in transportation, energy, telecommunications and water and sanitation, according to Resende, who is a professor and head of infrastructure and logistics at local business school, Fundação Dom Cabral.

"Although Brazil's concession-holders have been negatively impacted by the economic crisis, the recovery has started and investors know that demand will increase shortly, meaning more passenger traffic at airports and more freight handling on railways and at ports," Resende said.

Concession-holders and investors are not fools and, according to Resende, they have a much better understanding than the federal government of demand, technical know-how, management and the need for planning.

Currently, maintaining concessions during this slow period or partnering with current contract holders looks likely to pay off in the mid to long term.


Passenger traffic at Brazil's airports is expected to fall 16% this year, and is about 40% lower than projected during the feasibility studies of airport concessions.

The decline has hit operators such as Inframérica, consisting of Argentina's Corporación América and Brazil's Grupo Engevix, which has the concession for São Gonçalo do Amarante international airport in Rio Grande do Norte state.

Meanwhile, the Aeroportos do Futuro consortium led by infrastructure giant Odebrecht, which is facing all sorts of legal trouble related to the so-called Lava Jato investigation, is struggling to operate Galeão international airport in Rio de Janeiro.

Odebrecht is also having trouble operating and maintaining Rio's famed Maracanã stadium in partnership with US-based sports and entertainment company AEG.

Paulo Resende (CREDIT: MSL Group).