Government wants to unlock investments in road concessions

The federal government wants to attract more investors to the new road concessions planned for Brazil in the coming years. And, for that, he called the private sector into the conversation. With new policies established for the next concessions, ranging from public power participation in contributions to mechanisms that offer more legal security to companies, the objective is to unlock investments and ensure good adherence to the next planned auctions – among them, lots 1 and 2 of the new Paraná highway concessions.

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The new road concession policy was presented to investors and infrastructure operators this Thursday (15), during the Brasil Road Invest, held at B3, the São Paulo Stock Exchange. O Ministry of Transport (MT) brought the changes that the federal government projects for the new concessions designed for the country. Some of these changes are already included in public notices for highways in Paraná, which will be auctioned between August and September, on the B3.

The model of lowest tariff with contribution curve from an 18% discount – that is, if it offers a higher discount, the concessionaire deposits proportionally increasing amounts in an escrow account, to be used in the concession itself, as a guarantee for works – is one of the government’s big bets on the new model, as anticipated by Gazeta do Povo even before the launch of the bidding notice for the first lot. A way of correcting errors in past concessions, in which the modeling did not support the execution of contracts. The Paraná auctions will therefore be the testing ground.

But the proposal is a preparation for the next ones, after all, for 2023 alone, the launch of 5 public notices is planned – in addition to the 2 lots of integrated highways in Paraná, there are 2 others on BR-040, between Belo Horizonte and Rio de Janeiro and between Minas and Goiás, and 1 on BR-381, also in Minas. In addition, another 29 concession projects are being structured within the scope of the ministry, of which 24 should come out between the years 2024 and 2026.

“It gives the possibility to include new works, to withstand adversities throughout the contract and to mitigate the tariff step, which is the increase after execution of works. This contribution is important to maintain the security of the concession and guarantee that the project will remain healthy for 30 years”, says the national secretary of Road Transport for MT, Viviane Esse.

The objective is to ensure that what some assets experienced and are still evident in the country does not repeat, with concessionaires that did not manage to achieve the performance expected either by themselves, or by the granting authority and, even less, by the user.

Contributions with public resources

The secretary points out that there is an intention to model standardization, but that will happen according to the particularities of each project. Also because the government approaches a second alternative for the contributions, in which not only the concessionaire feeds the cash, but also the public power – even if within a pure concession project, in which the private entity is remunerated exclusively by the tariff. “This is possible when there are very large engineering or geological risks, or in works with a larger volume”, he explains. With that, he hopes, the contracts will be more sustainable and tariff reasonableness is guaranteed.

George Santoro, the ministry’s executive secretary, guarantees that this possibility is not about financing the private sector, but about funding projects to get them off the ground. “It is much cheaper for the government to contribute a piece and make the project viable. And it brings security to the investor because the government becomes a partner in the project with the contribution of resources, not just with the project itself. Some countries have already adopted this model”, he anticipates.

Legal and regulatory security

Another innovation is to offer mechanisms that give more regulatory and legal stability concessionaires, implemented based on market demand. The idea is based on experiences such as Colombia, where there are deadlines for imbalances and regular review of the tariff index.

The regulation would be in charge of the National Land Transport Agency (ANTT), but the basic idea is that the ordinary review is practically automatic within a certain percentage. “This speeds up the process and brings stability to investors. It is something that happens every year, but which, when it incurs delays, has an impact on the health of the project and on the user, because the delay has to be rebalanced and he is the one who ends up paying for it”, emphasizes Viviane.

Smaller batches and more competitiveness

As the Gazeta do Povo also anticipated, the last auctions of road concessions were not very competitive. This was mainly due to very large lots being auctioned, demanding very high investments, capable of being supported by few players.

The government seems to have already realized the challenge. “We want to create the possibility for new entrants to appear, because in modeling we are reducing the size of batches. We had very large lots in the past, of almost 1,300 km, which bring a very restrictive type of player”, says George Santoro.

One more option in this sense is to divide the contracts, with some focused on operation and maintenance and others more focused on investments and major works. “The user cannot differentiate between this, a contract that only performs maintenance and does not generate any improvements and another that generates great improvements, but in which he pays a lot for the tariff. This generates little understanding and we want to know if this path (of segmenting contract types) is interesting.”

Technological innovations

Alternatives like free flow, an automatic charging system on roads, which does not use gates and is already being tested in the country, should also be adopted for the next concessions. More than streamlining the flow, the system allows for fairer pricing according to the traveled routes.

World Bank studies show that there may be 15 to 20% reduction in the tariff, depending on the route, mainly at toll booths close to urban areas. The resource is studied through an ANTT regulatory sandbox, based on the concessionaire’s experience CCR RioSPon a stretch of BR-101 in Rio de Janeiro.

In addition, encouraging the use of electronic payment tags and discounts for frequent users are also means of guaranteeing better rates. “The intention is to allow innovations to be implemented”, guarantees Viviane Esse, remembering that other resources, such as internet access along the concession stretch, will also be included in the next contracts, as is already foreseen in the auctions of the first two lots of Paraná highway concessions.