Brazil regulator starts consultation on WACC methodology for highway concessions

Brazil's ground transportation regulator ANTT launched a public consultation to update the WACC calculation methodology, which is considered a key element to attract new participants in highway concession auctions.

The consultation will run until June 24.

"The weighted average cost of capital (WACC) methodology is an indicator that helps in perceiving the risks of each specific project, impacting both the remuneration expected by the market and the fee amounts to be paid to the awarding authority," ANTT said in a statement.

"Updating the WACC calculation is the main priority currently in the highway segment because we are living in a scenario of high interest rates across the globe and the WACC is part of the final calculation of the financial return that a contract has for investors. If we don’t update the WACC calculation, it will be difficult to attract more competition for future concession contracts," Marco Aurélio de Barcelos, president of the Brazilian association of highway concessionaires, ABCR, told BNamericas.

The government intends to offer 13 highway concessions this year.

"The main challenge in moving forward with 13 concession contracts this year alone is attracting new participants, as it is unlikely that companies already operating in the local road sector would have enough financial leverage to take on so many new contracts. The good news is that the government is listening to investor demands," said Barcelos.

Earlier this month, the transport ministry held a roadshow in the US to present the portfolio of projects for international investors.