Extreme climate events still not impacting Brazil concession contracts

The Brazilian government has announced initiatives to mitigate extreme climate events in various segments but the trend has not yet been seen when it comes to concessions and PPPs.

"I still don't see a material change in the terms and conditions of force majeure clauses or anything like that in the last six months or a year. The events in Rio Grande do Sul state, for example, have not generated changes in contract clauses in general so far," Pablo Sorj, a partner and lawyer specializing in infrastructure projects, M&As and project finance at law firm Mattos Filho told BNamericas.

In May, Rio Grande do Sul state suffered unprecedented flooding that lasted for weeks, affecting the state's infrastructure such as highways and the airport.

Since then, the Brazilian government has made a series of announcements showing concern about the effects of increasingly and persistent extreme climate events and is evaluating measures to mitigate such risks.

On July 19, the government is due to start a public hearing to draw up a climate change adaptation plan to serve as guidance for cities through 2035.

The hearing is being organized by the cities ministry and will be open through August 5. Suggestions can be sent via this link. 

"Social participation is a fundamental step in the formulation of the Cities Climate Adaptation Plan, because adaptation policies take place in the states and, mainly, in the municipalities. Through the suggestions, the ministry will be able to direct the department's actions related to the global agenda of adaptation to climate change in alignment with the population's expectations," the ministry said in a statement.

The government has a plan to invest up to US$2bn in disaster prevention works, including US$315mn in slope retention works and almost US$885mn in urban drainage this year, added the ministry.

Previously, the government announced that in future concession contracts for highways and waterways it plans to introduce clauses that assign resources to mitigate the effects of extreme weather events.