Brazilian Government Issues Provisional Measure Regulating Concessions Under PPI

The Brazilian Government has issued Provisional Measure No. 752/2016 ("MP 752") to regulate the renewal and the re-auctioning of concessions qualified for such purposes in the Investment Partnership Programme – PPI, including some concessions of highways, airports and railways.

The MP 752 regulates specific topics related to concessions: concession renewal; early concession renewal (in exchange for new investments) and the re- auction of existing concessions (early termination of the concession agreement, by mutual agreement between the Parties, and execution of a new agreement through a new bidding process).

The MP 752 opens a window of opportunity for investors and companies involved in the aforementioned sectors, taking into account:

new rules regulating concessions renewal, which benefits concessionaires that intend to maintain their concession additional period; concessionaires which have financial problems or those who are facing difficulties in the execution of an agreement may proceed with an early termination by mutual agreement; and existing concessions which are terminated early can be relaunched, thereby broadening the opportunities for new players; The table below synthesizes the main aspects of the new regulation regarding the concession of highways, airports and railways.

Highways Railways Airports Renewal Term extension rules provided in the concession agreement; Without any previous renewal; The renewal is possible only once; Not applicable to the renewal related to the economic-financial rebalancing of the concession. N/A Early-Renewal New investments not originally addressed in the concession agreement. New investments not originally addressed in the concession agreement; New provision on the concession agreement to overcome logistic and operational issues; The concessionaire should guarantee access to the rail-based network to third parties ; Service Level Agreements shall be attended by the concessionaire. N/A Re-auction Scenarios: concessionaires that have financial problems or those who are facing difficulties in the execution of the agreement. By mutual agreement between the concessionaire and the grantor; New bidding process. The...