New opportunites for the international private sector in Brazil’s infrastructue

On 13 September, the Brazilian Congress enacted the Federal Law nº 13.334, establishing the new Investment Partnership Programme (Programa de Parcerias de Investimentos – PPI), which aims to help execute public infrastructure projects and other concessions to the private sector.

Although the new law does not amend the most important rules concerning the procurement of construction works, concessions or public private partnerships; it aims to reduce government intervention in the design of infrastructure projects, making them more interesting to the private sector.

The law creates two distinct government institutions that seek to implementate the Programme: the Investiment Partnership Council (Conselho do Programa de Parcerias de Inevstimentos da Presidência – CPPI), that should assist the President in his decisions concerning projects and to the project’s progress; and the Investment Partnership Programme Secretariat (Secretaria do Programa de Parcerias de Investimentos), which aims to assist authorities at all levels of the Administration in getting infrastructure projects relevant to they included in the scope of the Programme.

The IPP Law also authorizes the BNDES (Brazilian Development Bank) to create and participate in fund called FAEP (Fundo de Apoio a Estruturação de Parcerias), which has the goal to finance and procure professional services for public authorities and to help in the structuring of Investment Partnerships. These services may be subcontracted from third party specialists (in accordance with applicable public procurement rules), and may be remunerated from project revenues. The bank will control the fund, with the possibility of investment form the public and private sectors.

The BNDES will also provide R$ 18 billion to support the financing of projects, through the subscription of debentures and loan financing, with additional R$ 12 billion being provided by other statal investment funds and banks.

Besides that, the IPP Law states that all tender documents shall be subject of the scrutiny from the Tribunal de Contas da União (The Federal Court of Accounts, usually referred by its acronym TCU), a measure that shall guarantee that the following concessions and partnerships will not have their legality questioned in the near future, avoiding a problem that occurs often.

Seeking to avoid similar problems, the IPP Law also states that all projects will have a previous analysis of their viability from the environmental point of view, in order to guarantee the required licenses, approvals and permits.

In order to facilitate the participation of foreign investitures, eliminating the possible ambiguities of translation, tender documents will be published in English as well as in Portuguese. In addition to that, the minimum deadline of the tender procedures will be of one hundred days, far longer than the usual practiced so far.

The Secretariat has already stated contractual amendments of all sorts shall be avoided, in or order to avoid any posterior illegalities.

The government has already published a list of 25 projects in the areas of transports, energy and sanitation that shall be part of the Programme, the first are the concessions of the airports of the cities of Porto Alegre, Salvador, Florianópolis e Fortaleza. That tender documents shall be available at the final quarter of the year, with the biding process itself taking place in the first quarter of 2017. There is also the expectation that in the final quarter of the present year the tender documents related to the Fuel Terminal of Santarém (PA) and to the Wheat Terminal of Rio de Janeiro.

The publishing of tender documents related to large five road sections is expected to the following year. The shall include the federal roads BR 364 and BR 365, between the states of Goiás and Minas Gerais; and BR 101, BR 106 and BR 386, located in the state of Rio Grande do Sul. Also in this list is the North-South Railroad, that passes through the states of São Paulo, Minas Gerais, Goiás and Tocantins; the so called Ferrogrão (a portmanteau for grain and railroad), linking the states of Mato Grosso to Pará and the West-East Railroad, in the state of Bahia.

Concerning energy, is forecasted the selling of assets of the Companhia de Pesquisa e Recursos Minerais (a governmental company that researches mineral resources), the privatisation of the a governmental company that distributes energy in the states of Amazonas, Roraíma, Acre, Alagoas and Piauí, and energy plants in the state of Rondôndia.

With regard to basic sanitation system, 18 states are interested with these projects. These are the states: Acre, Alagoas, Amapá, Amazonas, Bahia, Ceará, Maranhão, Pará, Paraíba, Paraná, Pernambuco, Piauí, Rio de Janeiro, Rio Grande do Norte, Rondônia, Santa Catarina, Sergipe, Tocantins, Rio de Janeiro, Rondônia and Pará. The last three ones already had their projects included in the PPI projects during the first council’s meeting, in September 2016.

Manucci Advogados, a law firm with headquarters in Brazil, is ready, with its multidisciplinary team of trained and qualified professionals, to provide all the necessary support for players from the private sector to take advantage of such unique opportunity.

That complete list of itens so far included in the scope of the Programme is as it follows:

Transport Sector

Porto Alegre Airport.

Salvador Airport.

Florianópolis Airport.

Fortaleza Airport.

Wheat Terminal of Rio de Janeiro.

Fuel Terminal of Santarém.

364 Federal Highway in State of Goias and State of Minas Gerais.

101 Federal Highway in State of Rio Grande do Sul.

290 Federal Highway in State of Rio Grande do Sul.

386 Federal Highway in in State of Rio Grande do Sul.

151 Federal Railway in States of São Paulo, Minas Gerais, Goias and Tocantins.

170 Federal Railway in States of Mato Grosso and Pará.

334 Federal Railway in State of Bahia.

Energy Sector

Fourth round of biddings of the peripheral oil and natural gas fields under the concessions scheme.

Fourteenth round of biddings of the exploration block of oil and natural gas under the concession scheme.

Second round of biddings under the regime of production sharing (areas of oil exploration).

Amazonas Distribuidora de Energia S/A.

Boa Vista Energia S/A.

Power Company of the State of Acre.

Power Company of the State of Alagoas.

Power Company of the State of Piauí.

Hydroelectric Plant São Simão, in State of Goias.

Hydroelectric Plant Volta Grande, in the State of Minas Gerais.

Hydroelectric Plant Miranda, in the State of Minas Gerais.

Hydroelectric Plant Pery, in the State of Santa Catarina

Hydroelectric Plant Agro Trafo, in the State of Tocantins.

Centrais Elétricas de Rondônia S/A.

Sanitation Sector

Water Distribution, collection and treatment of sewage – CEDAE

Water Distribution, collection and treatment of sewage – CAERD

Water Distribution, collection and treatment of sewage – COSANPA

Mining Sector

Mining rights of Miriri Phosphate

Mining Rights of Copper, Lead and Zinc in the city of Palmeiratrópolis, State of Tocantins.

Mining Rights of Coal in the city of Candiota, State of Rio Grande do Sul.

Mining Rights of Copper in the city of Bom Jardim, State of Goias.

Assets of the Companhia de Pesquisa e Recursos Minerais. – CPRM.

Ministry of Finance

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