Brazil Loosens Its Grip on Airports and Ports Privatizing and Leasing Facilities

Galeão Airport in Rio de JaneiroThe Brazilian government is expecting to raise US$ 1.3 billion with the leasing of facilities at its ports in the states of Pará and Santos, São Paulo, said government officials. The government announced it planned to offer 30 new areas for investment at the locations, expanding and modernizing terminal facilities.

“We want more cargo and cheaper and faster operations.” said Ports Minister Leonidas Cristino.

The facilities are scheduled to be auctioned for lease on November 25. The government is expecting some 1.6 billion reais in investments at 20 facilities in the state of Pará, and 1.4 billion reais in investments at 11 facilities in Santos.

With the leases, the government seeks expansion of port operations for grains, fertilizers, containers, cellulose and liquids.

Ports minister Cristino said the government would also focus on expanding railroad access to the port terminals. “We want the larger amount of capacity to be met by trains to reduce problems with truck traffic,” he said.

In all, the new investments should increase the ports’ cargo capacity by 48 million tons annually.

Brazilian presidential chief of staff Gleisi Hoffman, also present at the announcement, said the leasing contracts would include a reference rate of return of 7%.

“The rate of return should be around 7%, but it could be much more than that if the conditions of the contracts are adequately met,” she said.

Financing terms for the investments will be set at Brazil’s TJLP long-term interest rate plus 2.5 percentage points, over a period of 20 years.

Airport Concessions

An auction to privatize airports in Rio and Belo Horizonte, two host cities for the 2014 World Cup, will be held on October 31, Brazilian authorities have announced.

Presidential chief of staff Gleisi Hoffmann announced the date for the auction to sell concessions to run. Rio’s Galeão airport and Belo Horizonte’s Confins at a Brasília press conference.

Officials said bidders will have to make a minimum offer of 2.1 billion dollars for the Galeão concession and 450 million for Confins,

In February 2012, 20-year concessions were granted to manage three airports: two in São Paulo and one in Brasília, breaking the monopoly of Infraero, the federal agency that runs more than 70 airports.

Brazil, a continent-sized country of 196 million, has moved to modernize its aging and congested airports in preparation for handling tens of thousands of tourists expected for next year’s World Cup and the 2016 Rio summer Olympics.

Mercopress

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