Story originally published on 03.14.2023, by Lucas Bombana, on Yahoo Finanças, Yahoo Esportes and Acessa.com (in Portuguese).
The Via Appia Fundo de Investimento em Participações consortium won the auction to complete the works on the northern section of the Rodoanel beltway. The tender was held on Tuesday afternoon (14th) at B3’s headquarters in São Paulo.
According to experts, the auction was successful, considering the size of the discounts and the number of participants, with four interested consortia.
Asset manager Starboard, focused on investing in financially distressed companies, is behind Via Appia. The winning group offered a 23.1% discount on the amount to be paid by the São Paulo state government, estimated at BRL 1.4 billion, as a public contribution to complete the works.
Since toll revenue is not expected to be enough to adequately remunerate the concessionaire, the government undertook to make installment payments to offset the winning consortium’s expenses.
The PPP (Public-Private Partnership) model provided, as one of the criteria for choosing the winner, which consortium offered the largest discount on these installments, set at BRL 51.4 million per year.
Two participants offered bids with a 100% discount. As a result, the contest moved to a second phase, between Via Appia FIP and the Infraestrutura SP consortium, formed by EPR 2 and Voyager Participações.
In this second stage, the largest discount on the public contribution planned to complete the works, another payment to be made by the government, was taken into account. Via Appia proposed a 23.1% reduction, beating Infraestrutura SP, which offered 5.11%.
The SP Flow consortium, led by XP, and Acciona also competed in the auction, but offered discounts on the consideration of 60.03% and 12.90%, respectively, and did not advance to the second phase.
The tender was suspended by the courts on the eve of the scheduled date, but the São Paulo government managed to overturn the injunction.
Present at the auction, Governor Tarcísio de Freitas (Republicanos) said he was confident that, with the gavel struck, the northern section should be ready by June 2026.
“It is a section that has been abandoned for a long time, which deserved funds and people to come in and work”, said Marcus Bitencourt, a partner at Starboard, which will be making its first investment in highways.
Bitencourt also said that the Eastern section of the Rodoanel, which connects to the Northern one, is operated by a company under judicial reorganization (SPMar), and that there is “obvious operational synergy” between these sections.
“We want to have a good interaction with this other company to be able to help”, said Bitencourt, who did not rule out the possibility of Starboard investing in SPMar. “It all depends on the price.”
Director of FGV Transportes, Marcus Quintella says that, from the standpoint of the state of São Paulo, the result of the auction can be considered excellent, “as long as everything happens as planned”.
Quintella also says that companies waiving the government’s consideration is an unusual situation, and believes that the auction participants must have done all the calculations to confirm its feasibility.
A partner at consultancy Radar PPP, Guilherme Naves also says he considers the auction successful. “In none of the 14 highway concession auctions in the last two years has there been the number of bidders that came forward today”, says Naves.
In the expert’s view, one of the reasons for this interest is the São Paulo government’s good reputation in highway concessions.
“For quite a few years now, this agenda has been taken extremely seriously and conducted by competent civil servants. The result is clear: a stable regulatory environment and low perceived political risk, resulting in more attractive financial proposals from competitors with different profiles”, says the consultant.
Naves also says that, although Tarcísio’s government deserves credit, most of it should go to the previous government. “Obviously, a project with BRL 3.4 billion in private investment does not go to auction in three months.”
Luiz Felipe Pinto Lima Graziano, partner at Giamundo Neto Advogados and concessions specialist, said that the victory of FIP Via Appia reinforces the perception of a trend towards greater participation by funds and financial sector companies in infrastructure projects.
“While in the past there was a predominance of construction companies, more accustomed to engineering risks, today there is more significant participation by competitors with a financial profile. The works to complete the Rodoanel are challenging and will require sophisticated engineering solutions, which may be outsourced”, says Graziano.
The announced conditions provide for a 31-year concession term, with estimated investments of approximately BRL 3.4 billion, according to the tender notice published in August 2022.
Of this amount, around BRL 2 billion is expected to go towards completing the works, with the remainder used for the operation and maintenance of the highway, which will be supervised by Artesp (São Paulo State Transportation Agency).
44 KM TO GO
The last remaining stage of the São Paulo beltway is 44 km long, covering the municipalities of Arujá, Guarulhos and São Paulo. Its delivery should ease traffic on the Marginal Tietê expressway by serving as an alternative for vehicles that enter the capital only to access other highways.
In total, the Rodoanel will be about 176 kilometers long. The first section opened was the Western one, in 2002, followed by the Southern section in 2010 and the Eastern section in 2014.
Construction of the northern section of the Rodoanel began in 2013 and has been halted since 2018. The works were initially budgeted at BRL 4.3 billion but, by 2019, had already consumed around BRL 6.85 billion, becoming the target of investigations into suspected overpricing and corruption.
The contractors in the consortia, such as Coesa (formerly OAS) and Mendes Júnior, were hit hard financially by Operation Car Wash (Lava Jato), filed for judicial reorganization and were declared unfit by the Federal Government.
Rafael Benini, State Secretary for Investment Partnerships, preferred not to state how much work remains to complete the northern section of the Rodoanel, but estimates made five years ago indicated that 85% of the work had already been completed.
According to the planned model, the northern section of the Rodoanel will have no toll plazas. Tolls will be charged through sensors that measure the distance traveled by each vehicle. The initial forecast is a toll of BRL 0.15 per kilometer traveled.
An auction for the Northern section of the Rodoanel had been scheduled by the previous government of Rodrigo Garcia (PSDB) for April 2022, but was suspended one day before the scheduled date. According to the government at the time, the decision was due to the “uncertainties generated by the domestic macroeconomic scenario”.
To increase interest in the project and avoid another suspension of the auction, the internal rate of return offered to investors has now been raised from 8.93% to 9.99% per year.
