Brazil plans string of infrastructure concessions in 2024 despite recent lukewarm interest

The Brazilian government is planning to offer several infrastructure concession contracts in 2024 although the lack of interest seen in recent auctions may force some changes in the strategy.

For next year, the government plans auctions for port concessions totaling up to 10bn reais (US$2.04bn), mainly leasing contracts for terminals, while for highways 13 concession contracts are due to be offered involving estimated investment of 122bn reais. 

The plans were confirmed to BNamericas by spokespersons from the ports and airports ministry and the transport ministry.

However, investor interest in the most recent auctions has been tepid.

"[The government plan is] very optimistic, taking into account what happened in recent auctions. To be successful, there must be an effort to convince [investors] that these are solid projects, with suitable conditions and incentives, taking into account the particularities of each project and listening to potential interested parties. Dialogue here will be fundamental," Paulo Dantas, a specialist in infrastructure and project financing at law firm Castro Barros Advogados, told BNamericas.

On Wednesday, the government held auctions for four port terminal leases: MAC15 in Maceió, Alagoas state; POA02 and POA11 in Porto Alegre, Rio Grande do Sul; and RIG71 in Rio Grande port in the same state.

The auctions saw weak competition, with single offers in each one. The government collected a total fee of only 2mn reais for the four terminals while total investment is put at 55.2mn reais. 

A fifth terminal, VDC04 in Vila do Conde port in Pará state, was also expected to be offered by the federal government on Wednesday but a potential bidder obtained a court ruling to prevent the auction from going ahead after requesting changes to the terms.

Separately, Paraná state offered a lease for the PAR09 solid vegetable bulk terminal at Paranaguá port on Wednesday and local investment fund Q-PAR09 won the auction offering a fee of only 615,000 reais. The investment projected in the contract is 910mn reais in the next five years.

Highway auctions have also seen lukewarm interest this year.

In November, the government suspended the auction for the concession contract for highway BR-381/MG in Minas Gerais state due to lack of interest. The contract required the concessionaire to invest around 10bn reais over 30 years and currently the government is working on certain changes and expects to hold a new auction in early 2024.