Concession of 12 airports should generate R$ 3.5 billion in investments for Brazil

The first package of airport concessions of President Jair Bolsonaro's administration is expected to generate about R$ 3.5 billion in investments in the country. The auction will be held on the São Paulo Stock Exchange (B3) on March 15. The projects for the auction were divided into three airport blocks located in the Northeast, Southeast and Midwest regions of Brazil.

The winning bidders will be those with the best economic proposals, i.e. that offer to pay the greatest extra value in relation to the minimum amount established in the bid notice. The term of the concession will be of 30 years, with total signing bonuses of R$ 2.1 billion to be paid throughout the period. Check below for more details on each concession block:

Terminals

The largest block is in the Northeast, with six airports - Recife (PE), Maceió (AL), Aracaju (SE), Juazeiro do Norte (CE), João Pessoa (PB) and Campina Grande (PB). Total investment for the entire group is estimated at R$ 2.153 billion. The signing bonus for the block comprises a minimum down payment of R$ 171 million and a variable component to be paid along the concession term. This can be of up to R$ 1.5 billion (pegged to 8.2% of the gross revenue of the future concessionaire), totaling R$ 1.7 billion in total signing bonuses.

The Midwest block comprises the terminals of Cuiabá, Sinop, Rondonópolis and Alta Floresta, all in the state of Mato Grosso, and is expected to generate R$ 771 million in investments. Total signing bonus is R$ 9 million, (R$ 0.8 million down payment and R$ 8.1 million in the variable component, pegged at 0.2% of the concessionaire's gross revenue).

The Southeast block is made up of the airports of Vitória (ES) and Macaé (RJ), and is projected to generate R$ 592 million in investments. The signing bonus down payment is of R$ 47 million, with a variable component of up to R$ 388 billion (equivalent to 8.8% of the gross revenue of the future concessionaire), totaling R$ 435 million

Together, the 12 airports of the three blocks receive 20 million passengers a year and account for 9.5% of the Brazilian domestic market.

Bids

Companies and consortia interested in participating in the auction must present their bids by March 12th. The bids are presented in sealed envelopes which must contain the proposal itself and any qualification documents. The results will be announced in a public session three days later. Contracts with the winning bidders are scheduled to be signed by the second half of the year.

Requirements

The rules for this auction allow the same company/consortia to win the concession of more than one (or all three) of the blocks. In addition, there is no impediment to the participation of concessionaires that have already had terminals granted to them in previous auctions.

One of the requirements imposed on the winning bidders is to confirm they have the necessary technical capacity to process at 5 million passengers per year in a single airport for the Northeast Block and 1 million per year for the Southeast and Midwest blocks.

In addition, the winning consortia must allocate funds to the Personnel Reallocation Program of the Brazilian Airport Infrastructure Company (Infraero). The contribution amounts are R$ 302 million for the Northeast block and R$ 86 million for the Southeast block. The winner of the Midwest Block auction will not have to make this payment, since only the Várzea Grande Airport is managed by Infraero.

Next concession

After the conclusion of the concession process for the Southeast, Northeast and Midwest blocks, a new round of auctions is expected to generate R$ 3.4 billion in signing bonuses with the concession of 21 other airports spread throughout Brazil. In this new round, eight airports will be auctioned in the South Block, seven in North Block 1 and six in the Central Block. There is still no date set for that second auction.