Brazil's March transportation concessions a success

Friday, March 17, 2017

In the wake of a two-year recession in Brazil, the 16.2bn-real (US$5.19bn) in tenders for transportation infrastructure concessions in March have brought some hope to Latin America's largest economy.

While last week's award of a concession for seven highways in São Paulo state attracted a cannon payment 64% above the minimum stipulated, bidders on four international airport concessions on Thursday offered payments 23% higher than the minimum required.

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The result of the airport concessions could not have been better, according to Henrique Pinto, public policy secretary for Brazil's investment partnerships program, PPI.

"Despite the problems the country is going through, we are seeing good signs that there is hope moving forward," Pinto told BNamericas on the sidelines of an infrastructure event promoted by national infrastructure and basic industries association Abdib.

The airport auction, which took place on the São Paulo stock exchange BM&FBovespa on Thursday, was claimed to be a "success" by President Michel Temer, who tweeted that the result marks the "return of credibility" to the country in the international arena. All four tenders were won by foreign firms.

As for the highway tender, São Paulo state government also boasted that the process was a success and an opportunity for new players in the market, highlighting that it is the first time that the winning Brazilian-US group had competed for a highway concession in the country.


Local infrastructure fund Pátria Infraestrutura III, which is 40% owned by US-based investment fund Blackstone, won the highways contract in São Paulo state, which is known as the Centro Oeste Paulista concession, with an offer of 1.31bn reais. The required investment in the roads is 3.9bn reais.

Meanwhile, France's Vinci Airports won the concession for Luís Eduardo Magalhães airport in Bahia state capital Salvador with a bid of 1.59bn reais with required investment put at 2.35bn reais.

Germany's Fraport won two airport concessions, bidding 382mn reais for Porto Alegre's Salgado Filho airport and 1.51bn reais for Fortaleza's Pinto Martins airport. They require investments of 1.9bn reais and 1.4bn reais, respectively.

Finally, Switzerland's Zurich International Airport won the concession for Florianópolis airport for 241mn reais. The company will have to invest 961mn reais to build a new passenger terminal and operate it for 30 years.

Salvador international airport (CREDIT: SAC).