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As Interest Grows, Uncertainty Hangs Over Brazil’s Airport Concessions

07-27-2011 08:31 AM CET | Business, Economy, Finances, Banking & Insurance

Press release from: InfraAmericas

By Mick Bowen

A sense of uncertainty lingers over the coming concessions in Brazil's airport sector as operators, contractors and infrastructure investors attempt to figure out exactly what the Brazilian government plans to do, market sources have told InfraAmericas.

Yet the process is irreversible now that it has begun, ensuring that Brazil's most important airports will come under private control in the next year or so, they said.

"The model still is not very clear. We still don't know who is going to participate, but we know that we'll need someone with experience in airports. It's hard to find someone like that in Brazil today, which means an airport operator from abroad will have to participate," said Fabio Falkenburger, a partner at Sao Paulo-based law firm Machado Meyer. "The process has already started. It will be a little slow, but it has begun it's inevitable course," he added.

An Unclear Model
The federal government has six airport concessions in the works, with the new Sao Goncalo do Amarante Airport (ASGA) near Natal, state capital of Rio Grande do Norte, the first to go up for auction. The concession of the Guarulhos international airport in Sao Paulo will be next, followed by the Brasilia international airport, the Viracopos-Campinas international airport in Sao Paulo, the Galeao international airport in Rio de Janeiro and the Confins international airport in Belo Horizonte.

Civil aviation authority ANAC recently postponed the ASGA tender by about a month, pushing it back to Aug. 22 from Jul. 19, but the other five projects are currently on course to be auctioned off early next year.

"ASGA is the first privatization project and it is the easiest because it is a greenfield project. It will test investor appetite for Brazil's airport sector," Falkenburger said. "But the question for the other concessions is whether or not investors will want to be partners with Infraero."

A Minority Share for Infraero
Infraero is the government company that operates Brazil's airports. Initial plans for the brownfield expansion projects called for Infraero to maintain control of the existing terminals, while concessionaires built and operated the new terminals. However, faced with opposition from the private sector, the federal government recently outlined a proposal where the concessionaires would control 51% of each airport and Infraero would hold 49%.

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