Highways and sanitation lead US$3.1 billion in auctions set for June in Brazil

Brazil will hold at least six auctions in the infrastructure area throughout June, generating investments of 15.6 billion (bn) reais (US$3.1 billion).

The auctions will take place even with the approach of the electoral calendar in Brazil. In October, Brazilians will go to the polls to vote for president, state governors, representatives and senators.

Brazil is experiencing a highly polarized political scenario, with fierce disputes between left-wing and right-wing forces. Despite the deep polarization, the country’s political leaders have shown support for the continuation of concession and PPP agendas.

“The concession and PPP models in Brazil are already well established. That is why the auctions continue at a very fast pace even in an election year, with investors showing strong confidence in the country’s regulatory maturity,” Marcus Cavalcanti, special secretary of the federal government’s Investment Partnerships Program (PPI), told BNamericas.

The auctions scheduled for June are associated with a series of state government projects, and the largest projected amounts are concentrated in contracts in the areas of highways and sanitation.

Highways and sanitation

In the highway segment, the government of Rio Grande do Sul will hold, on June 10, the auction for the concession contract of the so-called Block 2.

The projected investment in the contract is 6bn reais, with the main works planned being 182km of duplications and 71.5km of third lanes.

The project has 1.5bn reais in funding from the Fundo do Plano Rio Grande (Funrigs), aimed at the resilient reconstruction of the highway, making it better prepared for future events, with impacts on tariff moderation.

Meanwhile, in the sanitation sector, two other contracts are expected to be auctioned this month.

The city government of Andradas, in Minas Gerais, will auction on June 16 a concession contract for sanitation services. The 30-year contract, extendable for another five years, provides for investments of around 210 million (mn) reais.

The state company of Ceará, Cagece, will offer PPP contracts on June 30, with 7bn reais in projected investments. The contracts will be divided into five blocks and will have a term of 28 years, covering sanitation services in 128 municipalities currently operated by Cagece.

Other contracts

In addition to highways and sanitation, other segments will also have auctions for PPP and concession contract tenders.

The government of São Paulo will auction, on June 12, the concession contract for the operation of the Campos do Jordão Railway, located in a tourist city in the interior of São Paulo state.

The project is expected to generate 315mn reais in investments for the modernization and maintenance of the railway, including stations, historic trains, and other support structures for tourist operations. The railway is 47km long and the concession contract will have a term of 24 years.

Still in São Paulo, the state government will offer, on June 25, a PPP contract related to vehicle removal and storage services. The project establishes a new model for the management of vehicle yards, focusing on operational efficiency, technological innovation, standardization of procedures, and the incorporation of environmental and governance practices.

The contract is expected to generate investments of 657.4mn reais and will have a term of 24 years.

In the area of social infrastructure, the government of Rio Grande do Sul intends to offer school PPP contracts totaling 1.4bn reais in investments. On June 26, the state will auction contracts structured in three lots, providing for improvements in the infrastructure of 98 schools and benefiting around 60.5 thousand students.

(The original version of this content was written in Portuguese)