Santa Maria city postpones streetlighting auction due to Rio Grande do Sul floods

The city of Santa Maria, in Brazil's Rio Grande do Sul state, has postponed a streetlighting auction due to the disaster in the state caused by heavy rains and unprecedented floods.

The city changed the auction date from June 14 to July 19 for the PPP contract, which was structured by regional development bank BRDE.

"In solidarity with all those affected by the biggest climate disaster ever faced by Rio Grande do Sul, the city of Santa Maria, together with BRDE, announces the postponement of the PPP," the city hall said in a statement.

The 24-year contract is worth 220mn reais (US$42mn) and involves installing 28,000 light points.

The devastating floods are also likely to impact existing streetlighting PPP contracts in other cities.

"Due to the floods, there are cities, as well as the state government, that are seeing severe revenue reductions. Economic activity is at a standstill in these cities and with less revenue coming in, there’s a possibility that local governments will not have the funds to meet the obligations assumed in existing PPP contracts," Pedro Vicente Iacovino, president of the Brazilian association for private streetlighting concessionaires (Abcip), told BNamericas.

State capital Porto Alegre, along with Caxias do Sul, Canoas and Sapucaia do Sul, are the cities that currently have streetlighting PPPs in place.

Despite the uncertainty caused by the floods, the number of streetlighting PPPs are likely to increase in Rio Grande do Sul as they have generated a fixed-cost reduction of up to 50% for local governments, according to Iacovino.

"In Rio Grande do Sul, in addition to the contracts already in force, there are 66 municipalities working to structure streetlighting PPPs with plans to modernize 450,000 points, benefiting 4.2mn inhabitants," he said.

Meanwhile, the state authorities are still calculating the damage from the effects of the recent disaster, while calling for more support from the federal government. According to governor Eduardo Leite, the floods will likely cause a tax collection reduction of 11bn reais for this year.