Pipeline – Brazil: Logistics Transportation, Basic Sanitation, and Health Facilities Projects – March 2023

PIPELINE

Brazil: Logistics Transportation, Basic Sanitation, and Health Facilities Projects

March 2023

Introduction

Brazil is in the midst of a massive, long-term expansion of its infrastructure. Highways are increasingly important to this policy. The costs of highway expansion and maintenance are proving to be elevated, and authorities are looking for more cost-effective and sustainable ways to serve these networks.

Increasingly, Brazil has shifted away from government funding to private investment for infrastructure improvements. These projects are time-intensive, often taking as much as four years before the bidding phase of the project can begin. The Brazilian Development Bank (BNDES) has been consulting national and local governments through the planning phase of these projects taking on a more active role in development rather than financing alone.

The government has committed to the list of projects below which are in the research or bidding phase of development. The Ministry of Transport and Ministry of Ports and Airports will lead the national projects. The Federal Court of Audits, or TCU, will monitor the development.

DLA Piper in Brazil will provide monthly updates on project development. If you have any questions, please contact Carolina Caiado at carolina.caiado@cmalaw.com.

• AIRPORTS

 

– PPP Regional Airports – Amazonas

Project Summary: Amazonas qualified for the federal government’s Investment Partnership Program (“PPI”) on December 2, 2020, for improvements in the state’s airports: Parintins, Carauari, Coari, Eirunepé, São Gabriel da Cachoeira, Barcelos, Lábrea and Maués. Approximately 2,140 jobs are expected to be created with these projects.

Status: Technical studies to support the model have been requested.

– New public procurement proceeding of São Gonçalo do Amarante airport in Natal / Rio Grande do Norte

 

Project Summary:  Brazil’s northeast São Gonçalo do Amarante Airport (ASGA) was purchased in 2011 becoming the largest cargo airport in the region. According to a National Civil Aviation Agency (ANAC) survey, it is considered the second-best airport in the category of airports that receive up to five million passengers.

In the current dispute, the winner will manage the Potiguar air terminal for the next 30 years and invest at least R$ 308.9 million.

 

In 2019, ASGA carried more than 2.2 million passengers on domestic flights and 89,000 passengers internationally. Geographically, the São Gonçalo do Amarante airport has the potential to become large hub for tourism and trade. In 2020, the current concession holder Inframerica formalized a request to return the concession, and the project qualified for the PPI through Resolution No 122 of October 6, 2020. In 2021, ANAC promoted a public consultation to gather suggestions and contributions to the project.

Status: The request for proposals (RFP) was published on February 8, 2023, in the Federal Official Gazette. The auction is expected to be held on May 19, 2023.

 

–  New public procurement proceeding of Viracopos Airport Campinas / São Paulo

Project Summary: The Viracopos International Airport (VCP) was purchased in 2012 and is Brazil’s second largest cargo airport. The airport plays an essential role in Brazil’s economy particularly in the Campinas region. In 2019, it handled more than 53,400 tons domestically and 254,000 tons internationally.

In 2019, the Viracopos International Airport carried more than 9.7 million domestic passengers and 966,000 international passengers.

The airport qualified for PPI through Resolution No 123 of October 6, 2020.

In 2020, ABV – Aeroportos Brasil Viracopos filed a request with ANAC to return the concession.

The study and time frame for public comments concluded in 2021.

The study documents can be found here.

Status: Awaiting TCU Assessment.

– Santos-Dumont and Rio-Galeão Airports public procurement proceeding

Project Summary:  Santos Dumont Airport, near Rio de Janeiro’s main tourist attractions, is one of the country’s busiest. The Rio-Galeão Airport is the largest airport in the state of Rio de Janeiro and ranks is among the country’s ten busiest airports.

The current concessionaire of Rio-Galeão airport executed an amendment to the contract with ANAC to return the asset. Both airports will be included in the same public procurement proceeding.

Status: Studies in progress. According to recent press releases, the government has been negotiating with invested parties to keep the contract in place.

• PORTS

 

– PAR 50 – Liquid bulk terminal at the port of Paranaguá / PR

Project Summary: This brownfield terminal has 85,392 dedicated to the handling, storage, and distribution of liquid in accordance with the Development and Zoning Plan (PDZ) of the Port Administration of Paranaguá and Antonina – APPA (currently Paraná Ports).

The project established for the PAR50 connects by road to the south and southeast regions and by pipeline connection to the public wharf. The bulk liquids consist of chemicals, vegetable oils, ethanol and various other fuel.

The port is a major supply line for the region and country.

Status: TCU approved the studies on December 3, 2021. The RFP has not been published yet.

 

– STS 08 – Liquid Bulk Terminal in Porto Santos / SP

Project Summary: The Port of Santos/SP began with public consultation for two bidding rounds, the STS08 and STS08A leases. Investments are expected to BRL1.4 billion. They will be the largest port auctions held in the country to date.

The area called STS08 is 139,319 m² and is destined for the storage and distribution of bulk liquids, mostly fuels. The contract term will be 25 years and the investments foreseen total BRL 265.5 million and the total gross revenue for STS08 is BRL 2.842 billion.

The future terminal tenants will pay the port authority a monthly fee of BRL 1.5 million for the use of the area, plus BRL 9.35 per ton handled.

Status: Project under revision after deserted public procurement proceeding.

– MAC12 – Liquid bulk terminal at the Port of Maceió / AL

Project Summary:  The focus of the terminal in question is related to the handling and storage of fuels.

According to the Master Plan, bulk liquids represented 55% of the volume transported in the complex in 2017. In that year, about 300,000 tons of oil products were handled at the Port of Maceió, with S-500 diesel being the main product operated.

Likewise, ethanol has a great impact on operations with the movement of 220,000 tons, especially for cabotage unloading. Meanwhile, crude oil, coming from onshore wells located in the state of Alagoas, moved 163,000 tons (also data from 2017), by means of cabotage shipments.

The planned investments are BRL 9.27 million.

It is estimated that 602 jobs will be generated over the 25 years of the lease agreement, including direct, indirect, and income-effect jobs.

Status: The Judgment was issued on 11.23.2022. Awaiting the publication of the request for proposals.

 

– MAC11 – Liquid bulk terminal at the Port of Maceió / AL

Project Summary: The focus of the terminal in question is related to the handling and storage of fuel.

Bulk liquid represents 55% of the volume transported in the complex in 2017. About 300,000 tons of oil products that same year were handled at the Port of Maceió, with S-500 diesel being the main product.

Ethanol has a great impact on operations, being responsible for the movement of 220,000 tons, especially for cabotage unloading. Meanwhile, crude oil, from onshore wells located in the state of Alagoas, moved 163,000 tons (also data from 2017), through cabotage shipments.

An estimated 3,338 jobs were generated over the 25 years of the lease agreement, including direct, indirect, and income-effect jobs.

Status: The project underwent TCU analysis and the project was divided into two terminals (MAC11 and MAC11A).

 

– SUA 01 – Lease of Vehicles at Suape Port / PE

 

Project Summary: Port of Suape’s terminal vehicle storage and operations including roll-on roll-off loads (RoRo) has planned investments of BRL 7.5 million, subdivided into civil works and equipment.

Status: Studies in progress.

 

– VDC10 – Liquid and solid bulk terminal at the port of Vila do Conde / PA

Project Summary: The project refers to the leasing of the VDC10 Terminal – located in the Port of Vila do Conde, under the administration of Companhia Docas do Pará – CDP, for moving and storing bulk liquids and chemicals.

The 162.856 m² brownfield area is dedicated to bulk liquid, in accordance with the Development and Zoning Plan – PDZ of the Companhia Docas do Pará – CDP.

The contract will have a foreseen term of 25 years, extendable successively, at the Granting Authority’s discretion, up to a limit of 70 years. During this period, it is expected that the future lessee will make investments in the order of BRL 400,000 million, in facilities and equipment necessary for operation.

Status: Awaiting TCU Assessment.

– VDC10A – Terminal lease for liquid bulk in the Port of Vila do Conde / PA

Project Summary: In the port’s area of influence, there is great demand for bulk liquids due to the industries that make up the alumina and aluminum cycle in Pará.

Monthly lease value: R$ 2,400 thousand

Variable lease value: R$ 22.39/t

IRR: 9.38%.

An estimated 2,501 jobs to be generated during the lease contract (direct, indirect and income-effect).

Status: Awaiting TCU Assessment.

• MCP1 – Wood Chip Terminal in the Port of Santana/AP

Project Summary: The project covers the operation of a port terminal in the Port of Santana (MCP 01). The location of future lease facilities is an operating area of approximately 22,000 m².

Status: The studies have already been concluded and the project was approved by TCU (plenary session on 24.01.2018).

• RAILWAYS

 

– EF 170 – MT/PA – Ferrogrão Railway

Project Summary: The project aims to consolidate Brazil’s new export rail corridor through Arco Norte. The railway has a length of 933 km, connecting the grain-producing region of the midwest to the State of Pará, ending at the Port of Miritituba. The Santarenzinho branch, between Itaituba and Santarenzinho, in the municipality of Rurópolis / PA, with 32 km, and the Itapacurá branch, with 11 km, are also planned.

When completed, Ferrogrão will have high transport capacity and competitiveness for export production through the Arco Norte, the route of BR-163 highway. This corridor will complete a new route for the export of soy and corn.

The railway will alleviate traffic and environmental impacts of this highway. This reduction potential makes it possible for the project to meet premises guided by the Climate Bonds Initiative – CBI to allow future green bond issues.

The project addresses the expansion of the Brazilian agricultural frontier and the demand for an integrated cargo transport infrastructure.

Status: Awaiting TCU Assessment.

– New public procurement proceeding of the Malha Oeste Railway Concession Contract

Project Summary: Improvements are planned on the western lines after years of neglect in maintenance. This has led to a decline in transportation capacity both in speed and volume.

The Council of the Investment Partnership Program approved the “Malha Oeste” in 2021.

This process will invest in improvements and expansion of the railroad. In addition, a new public procurement proceeding will allow the concession contract to be updated based on the best current regulatory practices.

Status: Studies in progress.

 

– EF-277 – Paraná Oeste Railway – Ferroeste

Project Summary: This is to assist the Government of the State of Paraná with the objective of realizing the project, as an attractive venture for private initiative, through the support of the Federal Government to the process of privatization of the state company Estrada de Ferro Paraná Oeste, requested by the Government of the State of Paraná.

The project was qualified in the 13th Meeting of the PPI Council, through Resolution No. 133, of 06/10/2020, which originated Decree No. 10,487, of 09/15/2020.

Status: Studies in progress.

 

• HIGHWAYS

 

– Studies for concession of 7,230 km of highways – 15 highway exits in 14 UFs

Project Summary: The studies are being conducted by the Brazilian Development Bank (BNDES), which has already evolved in a first phase of pre-feasibility analysis of the stretches distributed in 13 states, selecting 12 highways totaling 7,356 km.

The studies conducted by BNDES indicated the feasibility of granting four roads in Goiás, Mato Grosso and Rondônia, totaling 2,572.1 km in length.

Status: Awaiting TCU Assessment.

 

– BR-040 / DF / GO / MG – Ratification of the Qualification ad referendum

Project Summary: The priority of the project is characterized by the situation of the concession contract in effect, with declared inability of the incumbent to comply with the obligations originally assumed. The concessionaire Via 040 filed a request with ANTT for friendly termination of the concession contract and consequent adhesion to the new public procurement proceeding. CPPI issued a favorable opinion ad referendum through CPPI Resolution No. 105, dated January 10, 2020.

With the execution of the project, the intention is to ensure the continuity of operational services and recovery, maintenance, monitoring, capacity expansion and improvements of the Brasília – Juiz de Fora axis, to maintain the level of service of the highway for the benefit of the population.

Status: Feasibility studies completed. The period to send contributions to the bid documents ended on December 1, 2022.

The public hearing documents can be accessed at: https://participantt.antt.gov.br/Site/AudienciaPublica/VisualizarAvisoAudienciaPublica.aspx?CodigoAudiencia=513.

• Concession of the BR-381/262 / MG / ES highways – Section of BR-381 / MG between Belo Horizonte and Gov. Valadares and BR-262 / MG / ES between João Monlevade / MG and Viana / ES

Project Summary: The project consists of the concession proposal for the operation of the infrastructure and the provision of public services for recovery, operation, maintenance, monitoring, conservation, implementation of improvements and maintenance of the service level of the BR-262/ES Highway, in the stretch between junction with BR-101 (B) – Viana/ES – up to the border between ES/MG; BR-262/MG, in the stretch between ES/MG border to the junction with BR-381/MG – João Monlevade/MG; and BR-381/MG, in the stretch between Belo Horizonte/MG to Governador Valadares/MG.

The section in question has an extension of 686.1 km, changing to 670.6 km after works of rectification of layout.

Status: Awaiting TCU Assessment.

 

– Studies for the Concession of the BR-158/155 / MT / PA Highways

Project Summary: The stretch of highway in question is an important outflow route for grain production from northeastern Mato Grosso, integrating the region to the Carajás railroad and allowing the export of the production through the Port of Itaqui/MA.

The project consists in the proposal of studies for the Concession for the exploration of the infrastructure and the provision of public services of recovery, operation, maintenance, monitoring, conservation, implementation of improvements and maintenance of the service level of the stretch of BR-158/MT road between Ribeirão Cascalheira/MT (junction with BR-080) to Redenção/PA (junction with BR-155) and of BR-155 between Redenção (junction with BR-158) and Marabá/PA (junction with BR-222).

Status: Studies in progress.

 

– BR-135/316/MA

Project Summary: The stretch is characterized by the impact of the works on several quilombola communities, generating restrictions on the work fronts due to the absence of a favorable opinion from Fundação Cultural Palmares – FCP, as required by environmental conditions in the licenses.

The characterization and identification studies of the quilombola communities were in the conclusion phase, but after a hearing with DPU/MA and MPF/MA, the FCP questioned the validity of the studies and requested the environmental agency (SEMA-MA) to suspend the licenses, in order to make adjustments and corrections in the environmental licensing process for the project.

Status: Studies in progress.

 

– Minas Gerais Highways

Project Summary: Subsystem 2 refers to Lots of Varginha-Furnas (432.8 km) and São João Del Rei (452 km) related to the Highway Concession Program of the State of Minas Gerais.

Status: Awaiting request for proposals.

 

– Paraná Highways

Project Summary: Concession of the federal highway system of the state of Parana, of up to 4,000 km of roads. The project benefits from the advisory of International Finance Corporation (IFC) and is being structured with Infra S. A’s financial support.

Status: Awaiting approval of the controlling bodies.

 

– Pernambuco Highways

Project Summary:  Concession of the highway system of the state of Pernambuco, of up to 234,6 km of roads.

Status: Awaiting request for proposals.

 

• Rio Grande do Sul Highways

Project Summary: Concession for the rendering of the services of operation, conservation, maintenance, implementation of improvements and expansion of transport infrastructure capacity of the Highways that are part of Lot 1 of the State of Rio Grande do Sul, with the extension of 444 km.

Status: Awaiting request for proposals.

• WATERWAYS

 

– Lagoa Mirim Waterway and São Gonçalo Canal/RS

Project Summary:  Concession of services in the waterways that connects Uruguay and Brazil (Lagoa Mirim and São Gonçalo Canal/RS)

The qualified stretches of the São Gonçalo Canal and Lagoa Mirim Waterway, in the state of Rio Grande do Sul, make up the so-called Brazil-Uruguay Waterway. The undertaking is structuring for the logistic integration comprised in the southern region of the South American continent.

Mirim Lagoon Waterway: the stretch between the Sangradouro Canal (Far North) and the Access Canal to the Port of Santa Vitória do Palmar (Far South).

São Gonçalo Channel: connection between Mirim Lagoon and Patos Lagoon.

Objectives of the concession: Deepening and maintenance of the navigation channel, guaranteeing safe vessel traffic throughout the year. The investments are related to dredging and signaling.

The enterprise was qualified in the PPI through Resolution No. 195, of August 25, 2021, of the Council of the Program of Investment Partnerships of the Presidency of the Republic, converted into Decree No. 10,865, of November 19, 2021.

Status: Studies in progress.

– Hydro Agricultural Projects and Irrigation Perimeters

Project Summary:  Qualified in the PPI by means of Resolution No. 216, of December 16, 2021, the seven hydro-agricultural and irrigation projects aim, through the development of water infrastructure, such as dams, canals, pumps, and water mains, to expand irrigation services and, in the case of the hydro-agricultural project, also water supply and energy generation, bringing economic and social development to the neediest regions of the Brazilian semi-arid region.

The partnerships with the private sector will allow the resumption of the implementation of these projects, interrupted due to the scarcity of budgetary resources, besides the incorporation of new technologies and higher productivity.

The seven new qualified projects are: Vale do Jequitaí (MG), Vale do Iuiú (BA), Chapada do Apodi (RN), Baixo Acaraú (CE), Tabuleiros Litorâneos (PI), Platôs de Guadalupe (PI), Tabuleiros de São Bernardo (MA).

Status: All projects in process of study, except Vale do Jequitaí that waits for the TCU Assessment.

• WATER AND SEWAGE-Basic Sanitation

• Paraíba Sanitation

Project Summary:  Brownfield, estimated investment of BRL 6,000 million.

Privatization project, through private participation, in the provision of public water supply and sewage services, as well as operational management services, in 93 municipalities in the State of Paraíba.

Status: Studies in progress

 

• Porto Alegre – Sanitation

Project Summary: Brownfield, estimated investment of BRL 2,100 million. Concession of water supply and sewage in the municipality of Porto Alegre (1.5 million inhabitants), state of Rio Grande do Sul.

Status: Awaiting approval of controlling bodies.

– Rondônia – Sanitation

Project Summary:  Concession or PPP for the provision of public water supply and sewage services, as well as operational management services, in 48 of the 52 municipalities in the State of Rondônia, serving approximately 1.5 million people, which corresponds to 92.4% of the state’s population.

Status: Studies in progress.

 

– Sergipe – Sanitation

Project Summary: The privatization project for water supply and sewage services covers the 75 municipalities of the state of Sergipe, which has a population of 2.3 million inhabitants.

Water supply and sewage services are currently provided by Companhia de Saneamento de Sergipe (Deso) in 71 of the 75 municipalities of the state. Deso is a mixed economy company, whose main shareholder is the State of Sergipe.

Status: Studies in progress.

• HOSPITALS

 

– Guarulhos – Hospital

Project Summary: Public-Private Partnership/PPP, in the form of a government-pays PPP, that entails construction, provision of equipment, operation, management and maintenance of infrastructure and the provision of clinical services and non-clinical services at the New Municipal Hospital for Children and Adolescents (NHMCA) in the Municipality of Guarulhos (São Paulo State).

Status: Studies in progress after the public consultation. The draft request for proposals can be accessed at https://www.guarulhos.sp.gov.br/article/prefeitura-disponibiliza-consulta-publica-para-o-novo-hospital-infantojuvenil.

– Aracaju Health

Project Summary: The project refers to the structuring of a public-private partnership (PPP) to improve the infrastructure of public primary health care (APS) services for the population of Aracaju (SE).

The initiative focuses on the management of primary health care units, specialized care units, and urgent and emergency health units in the municipality. The construction/expansion/operation of up to 25 units is estimated.

Status: Studies in progress.

– Jaboatão Health

Project Summary: The project refers to the structuring of a public-private partnership (PPP) to improve the infrastructure in public primary health care (PHC) services of the population of Jaboatão dos Guararapes (PE). The initiative calls for the construction of up to 32 units and should increase by 30% the supply of basic family health units in Jaboatão dos Guararapes. The PPP will be in charge of non-clinical services, such as building maintenance, reception, cleaning, and surveillance.

Status: Studies in progress.

– Recife Health

Project Summary: The project refers to the structuring of a public-private partnership (PPP) to improve the infrastructure of public primary health care (APS) services for the population of Recife (PE). The initiative focuses on the management of primary health care units, specialized care units, and urgent and emergency health units in the municipality. The construction/expansion/operation of up to 41 units is estimated.

Status: Studies in progress.

                                    São Paulo Public-Private Partnerships and Privatizations

 

• Concession for the provision of services of operation, conservation, maintenance, implementation of improvements and expansion of transport infrastructure capacity of 1,800 km of highways. The project includes the segments which have been currently operated by the concessionaires Via Oeste (169 km) and Renovias (346 km), as well as segments under management of the Department of Roads and Highways – DER (1271 km).Status: Studies in progress.

• Lot Coast (“Lote Litoral”) public-private partnership (PPP) – 213 km long.

After new studies, the project had changes in the: (i) contracting model, from common concession of public services to PPP and (ii) toll system, as the concessionaire will be required to implement the free flow technology.

Status: Studies in progress.

• North Coast Lot PPP (“Lote Litoral Norte”) – 135.5 km long, slope monitoring services, slope management, investments in the warning system and macro-drainage management.Status: Studies in progress.

• Travessias PPP – change in contracting model (PPP) after further studies. The new project comprises the ferries operated by the state-owned company Metropolitan Water and Energy Company (EMAE) and “Paraibuna Ferries”.Status: Studies in progress.

• Santos-Guarujá Dry Connection – studies update. The new project comprises an additional route to the Santos-Guarujá Crossing and saving of logistics costs.Status: Studies in progress.

• Water Infrastructure and DAEE Services PPP

Water Dams: Operation and maintenance of Pedreira and Duas Pontes dams and the adductor system; construction, operation, and maintenance of the Corumbataí and Piraí dams; and Construction, operation, and maintenance of 110 planned swimming pools.

Services: Pinheiros Canal and Tietê River: maintenance gutter and sediment control; plumbing system, river maintenance and control; deployment, management and control; micro and macro drainage; de-silting, rectification of river banks and erosion control.

Assets: Real estate asset management/sale.

Status: Studies in progress.

• EMAE Privatization – 961 MW – Installed PowerStatus: Studies in progress.

• Privatization of SABESP – According to the Government, the project may advance the achievement of services universalization targets; creating resources for investment in unserved areas and in specific areas (water security, drainage urban, flood prevention, solid waste); as well as increase tariff efficiency.Status: Studies in progress.

9) Intercity Train (“Trem Intercidades” – TIC). The train will connect the city of São Paulo to Campinas. The São Paulo Government has recently allowed the public procurement proceeding for the concession.

Status: Studies in progress.

For further information, please contact our partners.

Main Contacts:

Carolina Caiado
Public Law and Governmental Affairs
carolina.caiado@cmalaw.com

Marcelo Frazão
Energy and Natural Resources
mfrazao@cmalaw.com