The government of Minas Gerais unveils this Friday the public notice of the public-private partnership of the so-called Rodoanel de Belo Horizonte. It is an ambitious project to build from scratch a 100-kilometer beltway around the state’s capital city. The project will require investments of R$5 billion, of which R$3 billion will come from the public coffers.
The auction is scheduled to take place on April 28. The group that asks for the lowest contribution from public resources wins. The tariff was set at R$0.35 per kilometer, and the collection system will be “free flow” – without toll booths and payment according to the distance traveled.
The idea of the beltway is old, but it became economically viable after the multi-billion indemnity paid by mining giant Vale as reparation to the state for damages caused by the Brumadinho tragedy, a dam failure that claimed 270 lives three years ago. The government’s R$3 billion contribution to the project will come from this agreement, signed in early last year.
“As the construction work is carried out, the measurements will be made, and the company will receive the payments. The project has this advantage. The company will have funds available, money earmarked for this. The funds will be deposited by Vale and allocated to a specific account for the project. It is a very firm guarantee,” said Fernando Marcato, secretary of infrastructure and mobility of Minas Gerais.
The construction work will be carried out in stages, starting with the two busiest stretches, North and West, which pass through cities like Santa Luzia, Contagem and Betim. These two parts, which account for 70% of the traffic, are expected to be ready within four years, when toll collection will begin. The other stretches, Southwest and South, are expected to be delivered in up to six years.
As the route does not exist yet and, therefore, the traffic is unknown, the government created an additional risk sharing mechanism: in the first three years of toll collection, in each stretch, there will be the payment of a consideration to cover operating costs. “It is a way to mitigate the demand risk,” Mr. Marcato said. After this period, the private-sector company will be fully responsible for traffic variation.
The project is expected to draw the interest of several groups in the sector despite being a challenging undertaking, with a large volume of property expropriations, complex environmental permits procedures and resistance from cities cut by the beltway.
Since last year, the mayors of Contagem and Betim have been asking for a change in the route, so that the cities are not cut by the road. The mayor of Belo Horizonte also criticized the project and said mayors are not being heard.
Mr. Marcato says that there was a broad dialogue with all involved, during the two public consultations held in January and November 2021. He says that, after the contributions, changes were made to the southern stretch to reduce environmental impacts. However, the claims of Contagem and Betim were not met, as they proved to be unfeasible, he said.
“There was a request to put the track completely outside urban regions. As the cities requested, we studied this possibility, but we couldn’t do that. This change would have increased the project by 30 kilometers, and would have made it R$1 billion more expensive. Besides, it would lose a lot of demand, the beltway would lose its function,” he said.
Two other major challenges of the enterprise are the environmental permit and the high volume of expropriations required for the construction work. To reduce the uncertainties for the private sector, the state capped compensation costs. “If this is exceeded, the government steps in.”
Part of these eventual additional expenses are expected to be covered by Vale’s funds, since the interested parties will probably offer a discount in relation to the R$3 billion set aside for the road. In this case, the “remaining” funds will cushion additional expenses, including unexpected environmental compensations.
Source: Valor international