LatinFinance - November/December 2017 - 56

PARTING
SHOT
After auctioning four airport concessions, Brazil's
Investment Partnerships Program, or PPI, is on
track to develop highway and railroad investments,
says Maurício Quintella

Running on schedule
From the beginning, we promised to present sensible projects
that fit the reality of the country, mature projects that received
regulatory approval. We wanted to avoid presenting assets that
could later frustrate the market, which had happened in the past.
Today people are still asking if Brazil can take on so many projects.
But the program is right on schedule. We have conducted
studies within the established timeframe, we have conducted
public hearings within the established timeframe and we have also
conducted auctions, specifically in the transportation sector, where
we have already had four airport concession auctions. Unlike the
auctions during the previous government, the concessions did not
include the state-owned airport operator [Infraero]. They were
pure concessions and they received high premiums. Even during a
recession and a time of uncertainty in Brazil, the airports were very
attractive to the private sector.
In the previous airport concessions, the winners were large
engineering companies that did not have any experience operating
airports. Now the winners have a different profile, possibly due
to the new concession model. Now we have Vinci, Fraport and
Flughafen Zürich.
We are moving on to highways and railroads. We have three
highway concessions and five railroad concessions on the schedule.
The auction for the Ferrovia Norte-Sul, the main railroad in the
country, is scheduled for February 18. The winning bidder will
have the right to build a port as well. That was one of the biggest
obstacles. How are you going to auction a railroad concession
without a port?
Interest is widespread, including from international investors
from China and Russia. The Chinese are investing heavily in the oil
and gas sector and in ports in Brazil. They're buying companies.
They recently entered the airport sector with Galeão. They have
shown a lot of interest. I think they are going to study more airport
and port concessions.
We now have a more attractive financing model. [The national

56 L ATINFINA NCE.COM - November/December 2017

"THE CHINESE
HAVE SHOWN A
LOT OF INTEREST.
I THINK THEY ARE
GOING TO STUDY
MORE AIRPORT
AND PORT
CONCESSIONS"

development bank] BNDES
continues to finance the
projects, along with Caixa
Econômica Federal and
Banco do Brasil, but we have
also opened competition
through the capital markets.
You can look at the financing
options from Brazil's federal
banks but you can also
arrange your own financing
and build the project. BNDES
is not going to compete with
the market in that sense. It's
going to support it.
The government is also
replacing BNDES's longterm lending rate, the TJLP,
with the TLP over the next
five years and taking the
subsidies out of interest
rates. And it's making it clear
to the markets that now
there will be competition in
financing projects. By taking
away some of the subsidized
financing from BNDES,
competition will create
financing models that are
more interesting. LF

Maurício Quintella is the Minister of Transportation in Brazil. This
article is an edited transcript of his comments in an interview with
Mick Bowen.
http://www.LATINFINANCE.COM
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