Auction launched for Brazil road

Eight bidders are competing for the first road concession to be granted under Brazil’s Logistics Investment Programme.

Brazil’s government will today hand the operation and maintenance of the BR-050/GO/MG highway to the private sector, following an auction on the BM&FBOVESPA Stock Exchange in Sao Paulo.

The auction will have eight competing proposals and the concession – a 30-year contract that will see investment of R$3 billion (€1.0 billion; $1.3 billion) – will be awarded to the company that commits to charging the lowest toll rate.

The highest toll rate that can be charged is R$0.0787 per kilometre of highway, with the winner offering the greatest discount to this reference figure.

The length of highway covered by the concession is 436.6 kilometres (km), running from Cristalina, a small city in the state of Goias, to the Minas Gerais-Sao Paulo state border.

The concessionaire will be responsible for the construction of additional lanes on a 218.5km stretch between Cristalina and the Goias-Minas Gerais border. It is estimated that this expansion work will cost around R$650 million.

The contract also requires the winning bidder to invest in the recovery, maintenance and preservation of the entire highway, providing various services to users and deploying third lanes “whenever the volume of traffic so requires”.

Launched last year, Brazil’s $121 billion logistics programme – designed to address a 30-year logistics deficit – includes R$51.6 billion of investment on nine stretches of highway, totalling 7,000km of roads. Concessionaires for the nine stretches will all be selected through public auctions.

Yesterday, it was reported that Spanish bank Santander had given a shot in the arm to Brazil’s logistics programme be pledging financing of $10 billion over a three-year period.