São Paulo state’s transportation agency Artesp suspended a planned auction for a 3bn-real (US$574mn) highway concession after legal action was taken to demand a review of certain points of the notice, a headwind that could turn out to be positive in medium term.
“We have a major pipeline of offers for highway concessions in Brazil, a postponement of this one could be positive to attract more demand in the future,” Paulo Dantas, an infrastructure and project finance specialist at law firm Castro Barros Advogados, told BNamericas.
The state government was planning to hold the auction on September 15 for the concession of the Litoral Paulista road network, connecting Mogi das Cruzes city with various municipalities on the coast.
The suspension comes after the state audit court agreed to a demand from Mogi das Cruzes city hall to oblige Artesp to rework and republish the concession notice with more details, a spokesperson for the agency said.
The city is trying to avoid having a toll plaza in the municipality.
Artesp said the notice is being redrafted and there is still no new date for the auction.
In recent quarters, federal and state governments in Brazil have held a series of auctions for highway concessions and plan more, potentially diluting interest from infrastructure players.
The federal government is planning to hold an auction for a concession for the Dutra highway (BR-116) between São Paulo and Rio de Janeiro at the end of October.
It will involve investment estimated at 14.8bn reais, the most for any highway concession in Brazil.
According to financial advisers consulted by BNamericas, the Dutra auction is likely to attract all the main local and foreign infrastructure firms and investment funds as the highway is highly attractive in terms of traffic numbers. The concession package also includes the Rio-Santos coastal route (BR-101).
The 30-year Litoral Paulista concession contract comprises 222km of highway and involves expansions, operations, maintenance and other infrastructure works.
The projected investments include 1.6bn reais in the first five years of the concession. The original concession contract required 89km of widening works, and 140km of additional lanes, among other improvements.
The package is expected to comprise nine highway sections: SP-088, Estrada do Evangelho Pleno, Rota do Sol, SP-098, SP-055, SP-055, SP-055, SPA 291/055 and SPA 344/055 in 12 municipalities: Arujá, Bertioga, Biritiba-Mirim, Itanhaém, Itariri, Miracatu, Mogi das Cruzes, Mongaguá, Pedro de Toledo, Peruíbe, Praia Grande and Santos.