Brazil Seeks To Raise $1.75 Bn In Huge Concession Auction

Brazil seeks to raise $1.75 bn in huge concession auction

Sao Paulo, April 6 (UrduPoint / Pakistan Point News - 6th Apr, 2021 ) :Brazil will sell operating rights to 22 airports, five ports and a railroad in a massive auction this week, seeking to raise $1.75 billion and soothe investors wary of recent volatility in Latin America's biggest economy.

The three-day infrastructure concession auction, which kicks off Wednesday, has drawn interest from big international players including France's Groupe ADP and Vinci, Spain's Aena, Brazil's own CCR, and Brazilian-Argentine consortium Inframerica.

The question is how high such firms will bid at a time when the coronavirus pandemic has upended the transport and travel industries worldwide, and as analysts warn Brazil faces twin health and political crises that are clouding its economic future.

"It's not ideal timing," said lawyer Leticia Queiroz of Sao Paulo firm Queiroz Maluf, which specializes in public-private partnership contracts.

"It's not a good business environment," given the uncertainties the pandemic has piled onto the already tricky question of valuing long-term infrastructure investments, she told AFP.

"I don't think (the auctions) will be as competitive as expected. I think there will be less bidders." Originally scheduled for October last year, the auctions were postponed because of Covid-19, which has claimed more than 330,000 lives in Brazil -- the second-highest toll worldwide, after the United States.

It could be a risky bet holding the auctions now, at a time when the virus is claiming more lives in Brazil than anywhere else and President Jair Bolsonaro is facing a firestorm of criticism for his handling of the pandemic.

The far-right leader took to social messaging app Telegram Saturday to make a personal pitch for "#InfraWeek," touting the "biggest airport auction in Brazilian history.

" Bolsonaro and Economy Minister Paulo Guedes are keen to soothe investors who are wary of Brazil over its soaring Covid-19 deaths -- an average of nearly 2,700 per day over the past week -- and the upheaval that is creating.

- Brazil a risky bet? - Up for re-election next year and facing pressure to get control over a pandemic he has long tried to minimize, Bolsonaro triggered market jitters last week by replacing his foreign, justice and defense ministers and naming new army, navy and air force commanders.

The move has raised concerns the president is digging in for a bout of political turmoil, a troubling prospect for the business sector.

Bolsonaro campaigned in 2018 on a promise of large-scale privatizations and concessions of state-run companies and infrastructure to slash Brazil's budget deficit and debt -- which have only grown since, as the pandemic has pushed privatization plans to the back burner.

First up on the auction block Wednesday in Sao Paulo will be concessions for up to 30 years to operate 22 small and medium airports, including regional hubs such as Amazon rainforest city Manaus and tourist drawcard Foz do Iguacu.

The infrastructure ministry is targeting a total price tag of more than 6.1 billion reais ($1.1 billion).

Thursday's auction will be for a concession to finish building and then operate the Fiol 1 freight rail line in the northeastern state of Bahia for 35 years.

The government is seeking 3.3 billion reais, but could struggle to find bidders, according to Brazilian media reports.

On Friday, the ministry will auction leases on five port terminals in the northeastern state of Maranhao and southern state of Rio Grande do Sul, seeking a total price tag of 600 million reais.