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Infrastructure: Brasília reduces minimum price for auction of Confins airport
Brasília reduces minimum price for auction of Confins airport
By Daniel Rittner | Brasília
The federal government has reduced by 36% the minimum license price for the Confins airport auction. The Secretariat of Civil Aviation revised the initial bid down to R$993 million from R$1.56 billion. The auction will be won by the consortium offering the highest bid. There were no changes in the internal rate of return, kept at 6.46% a year. The new minimum price is due to adjustments in the amount of investments demanded during the 30-year concession contract.
New demands included, for example, a higher number of passenger boarding bridges to be built by the future concessionaire. Since investment demands increased, the minimum price fell. Confins is the airport serving Belo Horizonte, capital of Minas Gerais. In the case of Galeão, Rio de Janeiro’s international airport that will also be auctioned, there were adjustments in work demands too, but smaller ones. The initial bid was raised to R$4.73 billion from R$4.65 billion — a 1.8% increase. In Galeão, the exact opposite happaned: there was a slight reduction in investments required over the 25 years of contract, pushing the minimum bid higher.
“The internal rate of return didn’t change. The Treasury understands there is no need. The project’s profitability is assured,” the minister of Civil Aviation, Moreira Franco, told Valor. New versions of the tender notices will be sent this week to the Federal Audit Court (TCU).
The decision to keep the return rate unchanged caused dissatisfaction at consortia that intend to take part in the auction. They claim that the demand studies used by the government are outdated, considering the economy’s stagnation and the scenario of rising airfare prices. The studies point to average annual growth of 4.7% in the volume of passengers for the next three decades for Galeão and Confins. In the first half of this year, though, figures were well below that.
From January to June, according to numbers of Infraero, the state-owned airport operator, domestic and international passenger traffic at Galeão was 8.47 million — slipping 0.2% from the same period in 2012. At Confins, traffic was 4.91 million passengers — 4.5% less than a year earlier. For private-sector investors, this may be reflecting an accommodation of demand, with repercussions for the entire concession period. Demand will continue growing, investors say, but not at the projected pace.
The government disagrees and doesn’t see the first half’s demand fall as a trend. “In the past ten years, civil aviation had a boom and tripled the number of passengers. In 2009, for example, the number fell. Over a long series, there are variations of all natures, but any study today points to a path of strong and consistent growth,” says Guilherme Ramalho, executive secretary of the Secretariat of Civil Aviation.
Current controlling shareholders of privatized airports — Guarulhos, Viracopos and Brasília — were allowed to take part in the next auction. However, the 15% limit for their participation frustrated companies. Invepar, which controls the Guarulhos Airport, in São Paulo metro area, was articulating to join the bidding for Galeão and Confins together with Italian operator Atlantia. UTC, which shares the control of Viracopos with Triunfo, was in advanced talks with Europeans and Americans.
The government’s retreat, after showing intransigence in the defense of such restriction, is attributed behind the scenes to former President Luiz Inácio Lula da Silva and his close aides. They were directly reached out by the companies, which no longer saw chances of altering the rules at the Palácio do Planalto, the president’s office. Minister Moreira Franco said he was unaware of the issue, but stressed that the loosening “of the rule keeps the principle of competition.”
The minister said the participation of 15% of current controlling shareholders in private-sector consortia obeys the Brazilian Corporate Law, which sets this ceiling in order to prevent the shareholders from having vote rights. “There’s a strong competitiveness logic,” he explained. After the contract’s signing, with the alliance of Infraero to the auction winners, the current controlling shareholders of already privatized airports will be able to hold at most 7.5% stakes in Galeão and Confins.
The trend now, Valor has learned, is that companies such as Invepar and UTC seek minority positions in the consortia being formed.
Behind the scenes, there is strong investor concern over the situation of Reidi, the special taxation regime that exempts from social contributions PIS and Cofins all purchases of machinery and equipment for the construction work. A new Secretariat of the Federal Revenue rule, published in December 31 of 2012, froze the inclusion of new infrastructure projects – especially in the electricity industry – in the tax regime. The measure can cut down costs up to 9.25% is being taken in consideration in the investment figures being demanded from future concessionaires.