The Infraero Concession Auction Ends With Revenue of R$ 2.4 Billion in Initial Grant

The 12 Terminals Auctioned This Friday Represent 9.5% of All Domestic Air Traffic in the Country, With Nearly 20 Million Passengers Per Year, According to Anac. With This Friday’s Auction, Almost 70% of Brazil’s Air Traffic Will Be At Airports Managed by the Private Sector.

The fifth airport concession auction in Brazil held this Friday, the 15th, the first under the Bolsonaro administration, will increase the number of airports managed by the private sector in the country from 10 to 22. The auction exceeded the government’s expectations and was considered a success for the resumption of investments in infrastructure, an essential sector for the growth of the Brazilian economy. The government raised 2.377 billion reais in fees from the auction of 12 terminals, divided into three blocks (Northeast, Southeast, and Midwest), an amount greater than the initially expected 2.1 billion reais. Compared to the minimum bid set by the government, which was 218.8 million reais, the total of the winning bids had an average premium of 990%.

Foreign investors took the largest share of the auction. In a bidding war with many offers, the Spanish group Aena Desarrollo Internacional won the Northeast block for 1.900 billion reais. The Southeast terminals went to the Swiss group Zurich Airport, with a bid of 437 million reais. The Midwest block, the smallest of the three, had its winning proposal from the Aeroeste Consortium, formed by the highway companies Socicam (responsible for the Tietê Terminal in São Paulo) and Sinart, for 40 million reais.

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The conclusion is that they are believing in the country and in respect for long-term contracts, a fundamental factor in the concession process. This means that investors evaluate that airports and demand for flights will grow in Brazil,” says Rodrigo Protasio, CEO of JLT Brazil Reinsurance.

The concession fee for the three blocks, amounting to R$ 2.1 billion, to be paid over the course of the concession, will depend on the gross revenue of the future concessionaire. Thus, if airport traffic decreases, the company will pay less to the government, which will share the economic risk with it. The variable fee will be calculated based on the gross revenue of the future concessionaire, set at 8.2% for the Northeast block; 8.8% for the Southeast block; and 0.2% for the Midwest. The concession period will be 30 years.

By the end of March, three more auctions in the infrastructure sector will be held. The most awaited is for the concession of the North-South Railway, scheduled for March 28. On the next 22nd, the auction for 4 port terminals will take place: three in Cabedelo (PB) and one in Vitória (ES). And on March 26, the submission of proposals for the PPP of the Integrated Communications Network of COMAER is scheduled.

THE PRIVATIZATION OF PETROBRAS AND OTHER STATE COMPANIES HAS BECOME A TOPIC OF DISCUSSION IN A SEMINAR ON THE NEW LIBERAL ECONOMY IN RIO.

Other ten airports have already been auctioned in previous years by Anac and had their administrations transferred to the private sector. These auctions have ensured the federal government a revenue of R$ 16.9 billion from 2013 to February 2019, an amount that represents about one-third of the total amount of R$ 49.2 billion expected by the contracts in payment of fees over the concession periods.

Currently, seven international operators are already active in Brazil: the Swiss group Zurich Airport (Florianópolis and Confins); the German Fraport (Fortaleza and Porto Alegre); the French companies Egis (Viracopos) and Vinci Airports (Salvador); the Argentine Corporación América (Brasília and São Gonçalo do Amarante); Changi Airports from Singapore (Galeão in Rio); and the Airport Company South Africa from South Africa (Cumbica in Guarulhos).

Check the Map of Airports Conceded After the New Federal Government Auction