57
july-august 2014
international
construction
Sobratema
ASSOCIATION
The Brazilian government has changed
aspects of its PPP framework to make
road concessions attractive to investors
while keeping tolls low, according to the
Brazilian Association of Technology
for Equipment and Maintenance
(SOBRATEMA)
.
Roads re-launch
T
he Brazilian government is preparing to launch a second
round of road concessions under its public private
partnership (PPP) framework. But history has shown this
type of project can be dogged by bottlenecks.
Following a trough in activity and a rather lukewarm recovery,
president Dilma Rousseff’s government has been working on a
formula that will please all stakeholders. The aim has been to
find a financial structure that allows low tolls for the user, while
still presenting a viable investment opportunity to the private
sector that will deliver improvements to the road network.
The level of tolls was the main focus of criticism against
concession projects in the past, and this seems to have
discouraged further schemes in recent years. However, the
government has included 30 concession schemes in a new round
of projects, and success stories like Rio-Niterói Bridge have been
cited as the way forward.
However, there is not a single concession
model that fits all circumstances.
Technical, economic and political factors
can all have bearing on the success of
projects.
Striking the balance
In recent memory, there have been
successful road concession projects, such
as those in São Paulo state, as well as the
failures seen in Rio Grande do Sul. In
both cases, the factors that stick in users’
minds are the size of the tolls and the
quality of the journey on the road. The
question is whether a good journey can
be achieved with a low toll?
The round of concessions launched in
the late 2000s saw low tolls being given
the priority. This lead to delays due to
the unattractive investment proposition, and projects that were
simply not feasible. It was against this backdrop that a new
round of concessions were launched in 2013 under the August
2012 Programme for Investment in Logistics (PIL) initiative
The initial reaction was poor, with one project not receiving
a single tender. In light of this the government revised the
concession agreements, allowing the public funding component
to be increased from 20% to 25% and concession periods to
rise to 30 years, from 25 years. The Brazilian Development
Bank (BNDES) is the main financing agent for these concession
projects, and another improvement in terms for the schemes is
the extension of the grace period from
three years to five before borrowers have
to start paying-off debt.
These changes seem to have addressed
investors’ concerns, and has led to greater
competition for concession contracts,
beyond the usual bidders from major
construction groups.
Faced with the challenge of improving
the Brazilian logistics, and encouraged by
the results achieved, president Rousseff
announced the new package of highway
concessions in January this year. Their
total investment is put at US$ 17.8
billion.
iC
High tolls have been a source of complaint in the past from road users.
The Rodovia dos Imigrantes in São
Paulo by Eco Concession Road
has been cited as an example of a
successful project.
