Brazil’s Bold Privatization Plan Put to Test With Airport Tender

President Jair Bolsonaro’s market friendly agenda faces a key test on Friday with an airport auction that will serve as a gauge of investors’ appetite for the administration’s massive privatization plan.

The tender is expected to generate 3.5 billion reais ($910 million) in investments in the next 30 years. That figure includes a minimum initial fee of 219 million reais and a minimum investment of 1.48 billion reais in the next five years –starting on the sixth year of the license, operators will also pay the government a percentage of their gross revenue.

Key Points

There are 12 airports being auctioned, divided in three blocks: Northeast, with airports in Recife, Maceio, Joao Pessoa, Aracaju, Juazeiro do Norte and Campina Grande. Center-West, with airports in Cuiaba, Sinop, Rondonopolis and Alta Floresta Southeast, with airports in Vitoria and Macae. Potential bidders include Brazilian toll road operator CCR SA, which already operates airports in Belo Horizonte, in the state of Minas Gerais, as well as in Ecuador and Central America. International operators Vinci SA, Flughafen Zuerich AG, and Fraport AG Frankfurt Airport Services Worldwide, which won concessions to operate Brazilian airports in a 2017 auction, are also expected to bid according to local media reports.

How It Works

Auction is scheduled for 10am in Sao Paulo with the opening of the envelopes containing the proposals, which were submitted on March 12. Bids will then be ranked by block; the three highest bidders for each block, or any offer that is equivalent to at least 90 percent of the highest bid, will move on to the next stage, the live auction. During the auction, only the names of the consortia will be announced, not the companies that are in them. The live auction for the three blocks happen at the same time; the same bidder can win more than one block. Anac and B3, which are organizing the auction, will hold a press conference along with the winning companies.

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