Get your motor running: Brazil highway sector heading for capex record

The Brazilian highway sector is on track to set a new record next year in terms of committed capex by private sector companies. 

A series of concession contracts offered in recent months showed that the sector is capable of attracting new players to the auctions. 

Furthermore, a recent decision from federal audit court TCU has opened the way for established companies to compete for new assets, by offering a quick resolution for contracts that concession holders want to return when traffic expectations have failed to materialize.

In this interview, Marco Aurélio Barcelos, president of highway concessionaire association ABCR, speaks with BNamericas about the sector’s outlook.

BNamericas: With many highway auctions planned for the coming months, what are the expectations regarding competition for these contracts?

Barcelos: The highway sector is in the midst of a very optimistic scenario due to the maturity of the sector and the contracts.

In the most recent auctions, we saw several new players participating in the tenders and established companies eyeing new contracts.

Therefore, the expectation is that the upcoming auctions will also attract many firms competing for contracts.

This scenario is very positive and welcome because, given the need for investment in highways, major private sector participation is necessary.

BNamericas: What is the capex projection for 2025?

Barcelos: Just like the expectation for 2024, in 2025 we will break another capex record in terms of highway concessions.

Until August, which is the most recent data we have, the capex of our member companies reached 9 billion reais [US$1.66bn]. As a comparison, in all of 2023 it was 11.2bn reais, meaning we’re already close to last year’s capex.

Investments continue on a very strong trajectory and we’re heading towards a peak. I still don't have exact data for next year, but we will likely exceed 15bn reais in capex, which will easily be a new record.

BNamericas: With so many contracts on offer and investments being made, are there any bottlenecks that the sector is facing?

Barcelos: It’s important that we strengthen the role of regulatory agency ANTT.

The regulator has carried out highly technical and very positive work, but more resources are needed to ensure that ANTT can meet its obligations with so many new highway assets being offered.

We need to look at post-tender issues, invest in tools that will strengthen the role of the regulatory agency.

As I said, the agency has been playing a positive role, but there will be an increase in demand for services with the new contracts, so ANTT cannot stop evolving, much less going backwards.

BNamericas: Do you see a need for more sources of financing in the sector?

Barcelos: We always need new funding mechanisms.

But we have to highlight that there is very important work being done in congress, which is the advancement of the regulation for infrastructure debentures. 

This debenture mechanism has been very successful in terms of financing the sector, and we already have record issuing volumes.

The path is paved, and I think this helps to grow our sense of optimism regarding the highway sector in Brazil.

BNamericas: What effects could the sector expect from the TCU's recent approval for the renegotiation of the Eco101 concession contract?

Barcelos: The TCU decision was extremely important, setting an important precedent.

Three or four years ago, it was unimaginable to think of a quick resolution to old concession contracts that were under stress.

Now, thanks largely to the TCU's leadership, we expect rapid resolutions for several other contracts.

In the end, those who will benefit from this development are the highway users.