The increase in the income levels of Brazilians over the past decade had a significant impact on the behavior of the country’s aviation industry. In 2013, a record number of over 111 million passengers were transported. This number includes travelers with both paid and free tickets, flown by both Brazilian and foreign companies in domestic and international flights. It was a 56% growth in just four years, according to data from the National Civil Aviation Agency (ANAC). The number of domestic departures grew significantly - from less than 59 million in 2009 to almost 92 million in 2013. According to a study by the International Air Transport Association (IATA), Brazil could become the third largest domestic aviation market in the world by 2017, only behind the U.S. and China.
Considering the need to improve the quality of airport services and infrastructure for users, and to expand the air transportation offering, the federal government launched a program of granting air terminal concessions to the private sector. In 2011, it included the international airports in Brasília in the Federal District, as well as Guarulhos and Campinas in São Paulo, in the National Privatization Program. In February 2012, it auctioned the three terminals and Triunfo, through the Aeroportos Brasil consortium, won the Campinas terminal for R$3.8 billion. At the end of the same year, the government announced the inclusion of the international terminals at Galeão in Rio de Janeiro and Confins in Minas Gerais, in the Program for Investments in Logistics (PIL) and determined their concession, which was held in November 2013.
In these five cases, the criterion for selecting the winners was the highest contribution to the airport system. The airports were managed by a Special Purpose Entity (SPE) in which Empresa Brasileira de Infraestrutura Aeroportuária (Infraero) holds 49% interest. The balance 51% are held by the consortia that won the bid. The concessions have different terms and after the expiry of the concession terms, the airports will return to government control and may be auctioned under a new concession. The proceeds from the auctions were transferred to the National Civil Aviation Fund (FNAC).
In addition to the Galeão and Confins concessions, the PIL also stipulated that the funds in FNAC be used for investments - estimated at R$7.3 billion - in 270 regional airports. The objective is to ensure that the equivalent of 96% of the Brazilian population has access to an airport that can handle regular flights from less than 100 kilometers away. Finally, the program also included incentives for the development of public civil airfields exclusively dedicated to general aviation operations, such as executive aviation, air taxi, instruction and training, and specialized services. Companies interested in this business must request authorization from the Civil Aviation Department (SAC). If approved, ANAC will formalize the delegation through an authorization.
In 2013, Brazil’s power generation installed capacity reached 126,700 megawatts (MW), growing nearly 5% from 2012, according to the National Electricity Regulatory Agency (ANEEL). The energy produced by hydroelectric power plants accounted for 64% of the country's installed capacity, followed by thermal power plants with 29%. Small hydropower plants accounted for 3.8% of the installed capacity, whereas wind power plants accounted for 1.7%. The balance, amounting to less than 2%, corresponds to the installed capacity of nuclear and generating plants.
The Brazilian power generation market is regulated and integrated. Project development and the use and sale of energy may be promoted by the federal government or third parties, through the granting of concessions, permits or authorizations. Historically, the sector – consisting of the generation, transmission and distribution segments – has been dominated by concessionaires controlled by the government. However, in recent years the government has sought to change this model by taking measures to encourage private and foreign investments, thereby increasing competition.
According to the latest Ten Year Energy Expansion Plan announced by the Ministry of Mines and Energy in December 2013, the expansion of the country's energy generation matrix requires investments of around R$200 billion through 2022, of which 54% will go to hydroelectric power plants, 41% to small hydroelectric plants, biomass projects and wind farms, and the remaining 5% to thermal power plants. The expected outcome is a 53% increase in the system’s installed capacity. According to the plan, hydroelectric power plants will continue their domination, representing nearly 65% of the power generation installed capacity.
Companies or consortia wishing to build or operate hydroelectric power plants and transmission lines must take part in concession bids. The procedure is different for generation from thermal and other renewable sources, requiring a direct request to the ministry or ANEEL for authorization to implement the project. Concessions grant the right to generate, transmit or distribute energy in a certain area for a determined period, which is usually 35 years for new generation concessions and 30 years for new transmission or distribution concessions. Existing concessions are renewed at the discretion of the government. Energy may be purchased or sold in the Regulated Contracting Environment, where distributors buy energy through auctions, or in the Free Contracting Environment, which is targeted at non-regulated agents such as large energy consumers.
Brazil’s port system consists of 37 organized ports, including sea and river ports, and 128 private use terminals (TUP), according to the Ports Department of the Federal Government (SEP/PR). Over 90% of Brazil’s foreign trade is carried out through these ports and terminals. According to the National Waterway Transportation Agency (ANTAQ), the volume of cargo handled at the ports and TUPs in 2013 was 929 million tons, an increase of around 3% from the previous year. Private use terminals accounted for 64% of the total cargo handled.
Until 1990, the ports system essentially consisted of ports managed and operated by the Port Authorities of each state and by Empresa Brasileira de Portos S.A. (Portobras), which was terminated by the National Privatization Program. In 1993, the participation of private initiative in the sector was regulated by the Port Modernization Law, which allowed companies to operate terminals located in organized ports. In the last two decades, the presence of private players in the sector favored investments in infrastructure and modernization of terminals.
In 2013, the Brazilian government took a major step forward by establishing a new regulatory framework for the sector. Sanctioned in June, Law No. 12,815, known as the Ports Law, focused on encouraging private investments and competition. There were significant changes. The TUPs gained autonomy to handle own and third-party cargo. The law also allowed concessionaires of terminals to hire permanent workers for their operations instead of ad hoc labor brokered by Manpower Management Agencies (OGMO), and guaranteed the right to successive renewals of the concession authorization term every 25 years.
One chapter in the Program for Investments in Logistics (PIL), launched by the Brazilian government in 2012 is exclusively dedicated to the ports system. Investments of R$54.6 billion are planned for the sector through 2017 in the form of concessions, leases and authorizations to build new TUPs, in accordance with the new regulatory framework.
A total of 159 sites for lease inside the organized ports have already been identified by SEP/PR. Antaq conducts the auctions of these leases. The criteria for determining the winning bid are the lowest tariff offered, the highest handling capacity and the shortest cargo handling time. No timetable is yet in place for these auctions. In the case of TUPs, which are located outside the organized ports, companies interested in obtaining authorization to build a port facility may submit a request to Antaq anytime. After receiving the request, Antaq publishes a Public Announcement to identify other parties that may be interested in projects with similar characteristics and in the same region. SEP/PR analyzes the feasibility of the projects and signs the contracts. Between the enactment of the Ports Law and November 2013, 77 projects were announced, with investments estimated at R$16.3 billion.
Click here to understand the change in the ports law.
The toll road concession segment, which accounts for 66% of Triunfo’s net revenue, gained spotlight with the resumption of auctions by both the federal and state governments in Brazil. According to the Brazilian Association of Highway Concessions (ABCR), the length of toll roads increased 57% in the past ten years, reaching 15,454 km operated by 54 concessionaires. In its pursuit of efficient highway maintenance to make the economy more competitive by reducing transport costs, Brazil is following the global trend of turning over highway administration concessions to the private sector. A survey conducted by Brazil’s National Confederation of Transport (CNT) in 2013, which analyzed 97,000 km of highways, showed that 48.5% of the highway stretches under concession were considered to be in excellent conditions of conservation, compared to only 2.7% of the stretches under public management. Year after year, highway concessionaires have also been successful in reducing the number of accidents. According to ABCR, the accident rate in 2012 - 0.78 for every 10,000 vehicles crossing the toll plazas in the highways under concession - was the lowest since the late 1990s.
The history of highway concessions in Brazil began in the 1990s with the enactment of laws, decrees and ordinances allowing the delegation of highway operations to private companies. At that time, the Brazilian government launched the Federal Highway Concession Program, covering 11,191 km of highways. In these past two decades, the Ministry of Transport, state governments and the National Land Transport Agency (ANTT), created in 2001, carried out the concessions envisaged in the program.
In 2012, highway concessions gained prominence in the Program for Investments in Logistics (PIL) launched by the Brazilian government to develop a modern and efficient transport system for the country. The PIL envisages auctioning off 7,500 km of federal highways, with total estimated investments of R$46 billion, as part of the third phase of the concession program launched in the 1990s. Of the nine lots included in the PIL, five were auctioned in 2013, totaling 4,248 km of highways under concession and investments estimated at R$23.4 billion during the 30-year term of the contracts. One of the lots, comprising a 1,176.5 km stretch in the BR 060/153/262 highways, was acquired by Triunfo in December 2013.
Concessions under the PIL are granted to companies that submit proposals with the lowest basic toll tariff. The adopted model determines that duplication works be completed within the first five years of the contract, which ensures that the bulk of the capital injection takes place in the short term. Toll collection is authorized only after the completion of at least 10% of the duplication works stipulated in the contract.