Brazil highway auction attracts sole bidder

Brazilian infrastructure consortium Via Brasil was the sole bidder in the auction for the concession of the BR-163/230 highway, linking Mato Grosso and Pará states.

The winning consortium - composed by local infrastructure groups Conasa Infraestutura and Zetta Infraestrutura e Participações, along with Rocha Cavalcante and M4 Investimentos - will operate and pave a 1,009km stretch of the highway. 

The concession will generate an estimated 1.87bn reais (US$357mn) in capex and opex of 1.2bn. 

"We have been studying this highway in depth for six months and we know that it is a challenging project,” said Mario Marcondes, CEO of Conasa, which is the leader of the consortium. “But the companies that are part of this consortium have expertise in the region, already operating three highways in the state of Mato Grosso,"

A large part of the highway must be repaved and that will be a difficult job for the concessionaire since the region receives heavy rains during half of the year.

Improving the highway's conditions is very important from a safety perspective, said infrastructure minister Tarcisio de Freitas (pictured), adding that he had suffered an accident on this highway.

A temporary solution

The concession will last 10 years, which is different from most of the highway concession contracts in Brazil that tend to have a 30-year duration. 

"I know this highway is a temporary logistical solution for this region because of our railroad project,” said de Freitas.

The federal government sees the Ferrogrão railway as the better long-term solution for the grain-rich states. 

The government is planning to hold an auction this year for the 69-year contract to build and operate Ferrogrão, which is one of the biggest projects in the country’s concessions pipeline due to its estimated capex of 25.2bn reais and opex of 66.5bn. 

Ferrogrão and BR-163/230 will run parallel and many local farmers are expected to prefer using the railway once it starts operating. 

Given this situation and the short concession contract, it was not a surprise that Thursday’s auction did not attract strong interest from the private sector. 

According to government officials consulted by BNamericas, well-known highway operators like CCR and Ecorodovias are bolstering their cash positions to participate in auctions for highways that have more vehicle traffic. 

Upcoming auctions

The government is planning to auction during this quarter the concession for the 626km Dutra highway, which runs between São Paulo and Rio de Janeiro.

The contract for BR-116/101 will be 30 years and involve capex of nearly 15bn reais and opex of 10.7bn.

This quarter will also see the auction of the BR-381 and BR-262 highways, totaling 670km between Viana municipality in Espirito Santo state and João Monlevade in Minas Gerais. The estimated capex for the 30-year contract is 7.7bn reais with opex of 5.29bn.