In fact, the airport tender was a special case, and the winning consortia will have the sweetest of deals, since the Brazilian Development Bank (BNDES) will finance 60 per cent of the works required for modernisation of the terminals and runways. The auction was also special in that the winning bidders were supported by the deep pockets of the pension funds of Brazilian state enterprises. But the issue remains, will the Workers' Party (PT) government permit other privatisations to take place – ports, for instance – now that the taboo has been broken? It all depends on Rousseff's capacity for leadership and her will to defy the entrenched interests of PT.
By road, sea, or rail
The government will propose tenders for 10-year concessions for the maintenance of federal highways. The Ministry of Transport intends to launch the initial tenders before the end of this year, under the public–private partnership (PPP) regime. Some 9,000 km of federal highways may be privatised, with new requirements for quality control. In the ports area, the government will have to tender at least 77 terminals whose concessions will expire by 2013. They are distributed over 15 ports.
As for the bullet train ( TAV ), the government decided to reformulate the terms of the tender, now scheduled for November, in order to absorb two risks pointed out by investors: foreign exchange and demand. It has been decided that the concession period will be 40 years, the internal rate of return of the project 6.32 per cent, and – for a total cost variously estimated at R$34 billion (by the government) and R$50 billion (by the builders) – the ceiling for public financing will be R$22 billion. (BNDES will not finance any imported equipment.) All of that, however, may still change.
For more news and expert analysis about Brazil, please see Brazil Focus.
© 2012 Menas Associates
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