Back to school: Education sector PPPs set to rise in Brazil

The number of PPP contracts to build and maintain public schools in Brazil is expected to grow strongly amid local governments’ budget limitations and increasing private sector interest.

São Paulo state recently auctioned PPP contracts for 33 new public schools, divided into two lots.

Last week, a consortium formed by Engeform and asset manager Kinea won the auction for one of the lots. Under the 25-year contract, the consortium will build 17 schools with an investment of 1bn reais (US$172mn).

The Novas Escolas Oeste SP consortium offered the biggest discount on the monthly installments the state will have to pay, at 21.4%. The other competitors were CS Infra, a consortium formed by Inova BH, 4UM and Perfin; a consortium comprising Agrimat Engenharia, CDL, CBI, DP Barros and A100X Empreendimentos; and PCS II Infra and Integra Brasil, which submitted a joint offer.

A few days later, the state offered the second lot, comprising 16 schools. The contract was won by Consórcio SP + Escolas, led by Agrimat Engenharia e Empreendimentos, which defeated bids from CS Infra and the Jope ISB consortium.

The 25-year contract will also demand an investment of 1bn reais.

"Few PPP models have a win-win relationship that’s as clear when it comes to schools since the private sector assumes the construction and maintenance costs, while on the government side the responsibility lies with the pedagogical part," João Cortez, a partner at infrastructure consultancy Vallya, told BNamericas.

Vallya worked as financial adviser for Consórcio SP + Escolas.

"In terms of guarantees for the private partner, the school PPP contracts count on Fundeb resources," added Cortez.

Created in 2007, Fundeb is a federal fund that supports the educational sector at the municipal and state level.

The fact that recent PPP tenders attracted multiple bidders is a positive precedent for upcoming auctions.

"The positive point is that we’re seeing a greater diversity in terms of the companies that are participating in the auctions. There's clearly a new market configuration, and this is very positive and signals a new era of PPPs and concessions in Brazil," Paulo Dantas, an infrastructure and project financing specialist at law firm Castro Barros Advogados, told BNamericas.

In addition to the contracts offered, São Paulo has plans for more.

The state government is currently holding a public consultation for a tender notice of a PPP contract for the renovation, maintenance, conservation and operation of 143 schools.

Rio Grande do Sul state is also planning school PPPs, while federal development bank BNDES is supporting municipal and state governments to structure their respective PPP contracts.

BNamericas takes a look at the PPPs being backed by BNDES.

Caxias do Sul 

BNDES is supporting Caxias do Sul, a city in Rio Grande do Sul, to structure a PPP contract for the construction, operation, conservation and maintenance of 31 educational units.

The auction is expected to take place in the first quarter of 2025.

Recife 

The bank is structuring a PPP contract to build 40 early childhood education units in Recife, capital of Pernambuco state, which will have capacity for 9,000 children.

The contract will demand an estimated investment of 526mn reais.

BNDES has not yet said when the auction will be held.

Minas Gerais 

The state is planning to offer a PPP contract for the renovation of 120 educational units, as well as the construction of three new units. 

According to BNDES, the tender notice is expected to be published in the fourth quarter of 2025 and the auction will be held in 1Q26.

Rio de Janeiro 

With support from BNDES, the city is structuring a PPP for the renovation, reconstruction, operation, conservation and maintenance of 212 school units. 

The bank has not yet provided information regarding the estimated investment and auction date.