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One of the most awaited auctions is that of the north stretch of the São Paulo beltway — Foto: Zanone Fraissat/Folhapress
One of the most awaited auctions is that of the north stretch of the São Paulo beltway — Foto: Zanone Fraissat/Folhapress

Inflation of inputs and global uncertainties have affected highway auctions this year, but the calendar of projects remains active. In April, three important state projects are planned: a block of roads in Rio Grande do Sul, the Belo Horizonte beltway (skirting the capital city of Minas Gerais) and the São Paulo beltway. The contracts add up to R$11.4 billion in investments in new projects.

There are groups studying the three assets, but there is uncertainty about the bids. This is the case of the auctions in Minas Gerais and São Paulo, scheduled for the last week of April. Some groups have requested the postponement of the projects to have more time for analysis. There is no decision yet. The Rio Grande do Sul government decided to keep the scheduled date, even in the face of uncertainties, as a test. The bidding will take place on the 13th, and the envelopes will be delivered this Thursday.

The highway segment is going through a challenging moment. The cost of raw materials such as asphalt and steel skyrocketed, increasing projections for investments. In addition, the high interest rates in Brazil increase the cost of debt for companies. To make things worse, the country will hold presidential elections this year, and the world faces the uncertainty caused by the war in Ukraine.

“There is a huge challenge, because the market has changed a lot between the definition of model and the date for the delivery of the bids,” said Guilherme Martins, head of structuring of companies and divestments at the Brazilian Development Bank (BNDES). The state-owned bank is carrying out studies for several highway projects in Rio Grande do Sul, Minas Gerais, Pernambuco and other states.

These challenges have been dealt with on a case-by-case basis, he said. In some, there will be a need for adjustments, for example, with the reduction of mandatory construction works or an increase in the tariffs of the bidding.

Despite that, the Rio Grande do Sul government has chosen to test the market. “We decided to keep the auction because we found that the project had ‘fat’, which would draw bids despite all the challenges. We believe there will be interest. Maybe less than in a calmer environment and maybe with a not-so-relevant discount [on the tariff]. If it fails [to draw bids], we will reevaluate,” said Leonardo Busatto, the secretary of partnerships of Rio Grande do Sul.

The government plans to bid three blocks of highways. The asset to be offered this month is block 3, which includes roads connecting Caxias do Sul to the capital city and other cities in the countryside. “We gave priority to this block because it is smaller and has a greater possibility of drawing interest, including from regional groups,” the secretary said.

The Rio Grande do Sul highway auction will be an important test for the other projects in the sector, Mr. Martins, with the BNDES, said. “It is the first relevant concession this year and since the beginning of the war. It will be a barometer for the market.”

One of the most awaited auctions is that of the north stretch of the São Paulo beltway. It is a public private partnership that includes completing the construction work and operation for 31 years. Investments are expected to total R$3 billion, of which R$1.7 billion will be required to complete construction.

Part of the funds will come from the government, which is willing to disburse up to R$2 billion. The amount, however, will be the selection criteria for the auction, so it may be discounted depending on how competitive the bidding is.

The project is considered very complex and challenging. The main concern is about the condition of the track already built – about 25% of the construction work remains to be done.

“There is a difficulty in understanding the state of the work that has been executed, and there is a concern of a mismatch between the described and the effective quality,” said Caio Loureiro, a partner at law firm Tozzini Freire. For him, the period given until the auction is considered exiguous and the participation of the private sector is a question mark at this moment.

The São Paulo state government said that “it is confident in the auction result.” And added that the Institute for Technological Research (IPT) has prepared independent technical reports, and that the contract provides, after signing, “a period of six months for an independent rapporteur to analyze the work. In addition, “any divergence may be resolved by an independent technical commission.”

For Lucas Sant’Anna, a partner at Machado Meyer (who worked on modeling the project), the expectation is positive. “We have seen reasonable interest from large groups in the sector,” he said.

Among analysts, the perception is that the interest in the Belo Horizonte beltway has been even greater than that of São Paulo. Four companies are interested, including international groups, said Fernando Marcato, the state’s secretary of infrastructure.

The government mulls postponing the auction at the request of the interested parties. “As some groups are based abroad, the crisis in Russia brings some uncertainty and requires additional studies. The industry is going through difficult circumstances. We are studying the matter. Chances are we will postpone it because we want to draw competition,” he said.

The Belo Horizonte beltway project is also a public-private partnership expected to draw R$5 billion in investments. Of this total, about R$3 billion will come from the government – the funds come from the agreement signed by the state with mining giant Vale after the massive dam failure in Brumadinho.

Since this project will be built from scratch, the contract is seen as very challenging, but also very attractive, said Ana Cândida Carvalho, a partner at law firm BMA Advogados.

One of the main risks is the expropriation required for the construction work. “This is always a bottleneck, and in this case, because it is a metropolitan region, the list of properties to be expropriated is long. The cost is not the biggest concern. The timeline is the most concerning factor instead, because it depends on lawsuits,” she said. Even so, she sees a lot of interest in the project, especially from large operators.

Source: Valor International

https://valorinternational.globo.com