Home' Trinidad and Tobago Guardian : November 28th 2013 Contents NOVEMBER 2013 • WEEK FOUR www.guardian.co.tt BUSINESS GUARDIAN
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razil opened two of its busiest airports
to private investors on Friday, awarding
US$9 billion worth of contracts in a hotly
contested auction as the country over-
hauls crowded terminals ahead of the
2014 World Cup and 2016 Olympics.
The concessions, in Rio de Janeiro and Belo Hor-
izonte, mean private operators will be running the
international airports in both World Cup host cities
next year, but there will be little time for their invest-
ments ahead of the tournament in June.
Local contractors and foreign airport operators won
the two concessions for a combined 20.8 billion reais
(US$9 billion), paying a premium of more than 250
percent over minimum bids as they hope to cash in
on a recent boom in Brazilian air travel.
It was a welcome victory for President Dilma Rouss-
eff, who has struggled to restore credibility with the
private sector as economic growth slumps and investors
complain of a heavy-handed approach to concessions
in the power industry and elsewhere.
"The result of the auction was exceptional. It proves
the country is on steady footing and it’s attracting
great interest from foreign investors," said Wellington
Moreira Franco, Rousseff’s civil aviation secretary.
Brazilian conglomerate Odebrecht and Singapore’s
Changi Airport Group will have two years to expand
Rio’s Galeão airport before the city hosts the 2016
Olympics, sprucing up an underwhelming international
gateway to Brazil’s postcard city.
Brazil’s CCR SA and the operators of airports in
Zurich and Munich edged out builder Queiroz Galvão
and Spain’s Ferrovial for rights to Confins airport in
Belo Horizonte in bidding that lifted their offer 30
Airports have been the most appealing aspect of
Rousseff’s plan to privatize some 200 billion reais of
infrastructure projects, including expansion of Brazil’s
notoriously clogged roads and seaports.
Rousseff pitched her program last year as a shot in
the arm for an ailing economy, but some investors
have balked at what they call unrealistic projections
and intimidating red tape. The government had to call
off auctions for highways and high-speed trains this
year because of weak private-sector interest.
After promising a dozen rail concessions by February
2014, the government is now aiming for just three in
the first half of next year, according to political analyst
Jefferson Finch of Eurasia Group. Government officials
have been silent on the auction of four public ports
expected this year, he added.
Interest in Brazil’s airports highlights the appetite
for profitable projects if investors are convinced of a
fair deal, but that demand has not yet rubbed off on
If anything, the fat premium for Rio’s airport paid
by Odebrecht—a major player in Brazilian infrastruc-
ture—could reduce its firepower for the four highway
concessions up for bidding in the next five weeks.
"The two winning groups will evaluate if they have
resources to participate in the upcoming auctions, but
the losers will certainly stay in the running," Gleisi
Hoffmann, Rousseff’s chief of staff, said in an interview
Subway and toll road operator CCR has already said
it plans to bid for two of the pending highway con-
Air travel boom
Demand for airport concessions has been robust as
companies clamor for part of an air travel market that
doubled in less than a decade as some 40 million
Brazilians joined the middle class and took to the skies.
The latest concessions follow an auction in February
2012 that awarded rights to major airports in Sao Paulo
and Brasilia for 24.5 billion reais - more than four
times the minimum bids.
Domestic air traffic may edge down this year for
the first time in a decade, but the need for new ter-
minals remains acute.
Three years ago, 14 of Brazil’s 20 biggest airports
were already running well in excess of capac-
ity, according to data from state airport oper-
ator Infraero, which retains a 49 percent
stake in the privatized airports. Passenger
traffic has surged more than 25 per cent since
that 2010 study.
Both airports in Friday’s auction are push-
ing capacity, according to Brazil’s civil aviation
Odebrecht and Changi, which paid 19 bil-
lion reais for rights to Rio’s Galeão airport,
plan about 5.7 billion reais of investments
over the next 25 years.
They will add 26 new gates and expand
cargo storage at Galeão, Brazil’s No. 2 airport,
which is officially named after Antonio Carlos
Jobim, the late bossa nova musician and
About 360 kilometres (220 miles) to the
north, in the mineral-rich Brazilian heartland,
CCR and partners Flughafen Zuerich AG
(FHZN.S) and Flughafen Munchen won rights
to Belo Horizonte’s airport, the country’s
fifth-busiest, for 1.82 billion reais.
The group is also on the hook for about
3.5 billion reais of investments over the next
30 years, adding a new terminal and landing
strip at Confins airport, on the outskirts of
Belo Horizonte, Brazil’s third-biggest met-
Visitors to both host cities for the World
Cup will have to rely on state-run construc-
tion at the airports in recent years aimed at
accommodating the crush of foreign fans.
($1 = 2.31 Brazilian reais)
Brazil awards US$9bn of airport deals
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