São Paulo, Brazil, October 1st, 2021 — The Consórcio Eco153, formed by Ecorodovias and GLP, signed recently a 35-year concession agreement with the Terrestrial Transportation Regulatory Agency(ANTT, for its initials in Portuguese) to recover, expand, maintain, and operate 851 Km of the BR-153/080/414/GO/TO road, an arterial link between the Mid-North of Brazil and the Center-South of the country. The project will greatly improve the logistics of key economic regions of the country and the user experience, thus impacting Brazil's productivity and competitiveness.
The concession was granted to Consórcio Eco153, after a competitive bidding auction on April 29th in the Brazilian Stock Exchange. The consortium offered a tariff discount of 16.25 percent and an upfront fee of BRL 1.28 billion (approximately $250 million). Over the 35-year term of the concession, are expected private investments of more than BRL 7.8 billion.
BR-153 is the first lot auctioned under the advisory mandate IFC signed with Ministry of Infrastructure through its planning and consulting arm Empresa de Planejamento e Logística (EPL). The mandate aims to structure and tender 10 road concessions of crucial importance for the country, totaling more than 6,000 Km and $16 billion of expected private investment. Besides the BR-153, IFC is advising the government on the concession to the private sector of the country's main transport corridors, such as the iconic Dutra - which connects São Paulo and Rio de Janeiro, CRT and Concer, the two main connections between Rio de Janeiro and Minas Gerais. The structuring and bidding of another 6 concessions – totaling more than 3,000 Km of road network in the State of Paraná – are also part of the mandate.
In the BR-153 road project, IFC supported EPL in the preparation of technical (engineering, traffic, and road safety analysis), legal, ESG, economic-financial feasibility studies, as well as in the preparation of the bidding documents and the promotion of the project. This concession marks the first project that encompasses a brand new regulatory model recommended by IFC, which includes, among many contractual and operational innovations, risk allocation based on project inherent characteristics (rather than the usual non-specific risk matrix), a bankability package aligned with international standards and a hybrid auction model that considers the combined criteria of a limited tariff discount followed by highest upfront concession fee.
The private sector investments in this project will guarantee the maintenance and expansion of the road capacity, technological resources, improvement of services to users, and improvement of the fluidity and safety of the road. The BR-153 road will be the first federal road to fully comply with IFC's Environmental and Social Performance Standards, to include resting areas for truckers, and to use iRAP (International Road Assessment Program), an international methodology that aims to reduce the likelihood of accidents by classifying infrastructure safety levels and defining high-performance engineering improvements in road safety.
"With this project, IFC aims to contribute to the improvement of the infrastructure in Brazil, offering credibility and transparency, attractive returns, and adequate risk allocation for the investor, while, at the same time, helping to promote economic development, job creation, and benefits to the users", says Carlos Leiria Pinto, IFC's Country Manager in Brazil.
"During the preparation of the concession, we adopted technological and contractual innovations based on the best national and international practices in the sector, to develop a new generation of road concessions to benefit millions of users through a better quality of service and reduce transaction costs to foster economic development", says Richard Cabello, PPP Manager for LAC.
The project was structured by IFC with the financial support of the Global Infrastructure Facility (GIF), a global collaboration platform that integrates efforts to boost private investments in emerging markets, and PSPInfra, a partnership between BNDES, IDB and IFC created in 2007 to improve the offer of public services through the development of infrastructure in Brazil, with the participation of the private sector. The structuring of the project was under the responsibility of EPL - Empresa de Planejamento e Logística S.A, Ministério da Infraestrutura and ANTT.
IFC has been investing in Brazil's private sector since 1957, addressing the country's most critical development challenges, including those of urbanization, social inclusion, healthcare, educational services, competitiveness and productivity, and management of natural resources.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
About PSPInfra
PSPInfra, created in 2007, is a partnership between the Inter-American Development Bank (IDB), the Brazilian Development Bank (BNDES), and the International Finance Corporation (IFC) to improve the offer of public services through the development of infrastructure in Brazil, with the participation of the private sector. PSPInfra supports the structuring and implementation of innovative projects conducted in Brazil in line with the best national and international standards.
PSPInfra's partners invested their own financial resources to pursue a common goal and cooperate in strategic decisions that steer the partnership's work. They have complementary roles that ensure the success of each project. BNDES contributed with a substantial portion of the resources available, and IFC
has been acting as the lead advisor in transactions, with BNDES co-leading certain projects. The execution of new projects under the PSPInfra umbrella may adopt different formats. Said projects can either be led by IFC or have the shared leadership of IFC and IDB and/or BNDES.
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The concession was granted to Consórcio Eco153, after a competitive bidding auction on April 29th in the Brazilian Stock Exchange. The consortium offered a tariff discount of 16.25 percent and an upfront fee of BRL 1.28 billion (approximately $250 million). Over the 35-year term of the concession, are expected private investments of more than BRL 7.8 billion.
BR-153 is the first lot auctioned under the advisory mandate IFC signed with Ministry of Infrastructure through its planning and consulting arm Empresa de Planejamento e Logística (EPL). The mandate aims to structure and tender 10 road concessions of crucial importance for the country, totaling more than 6,000 Km and $16 billion of expected private investment. Besides the BR-153, IFC is advising the government on the concession to the private sector of the country's main transport corridors, such as the iconic Dutra - which connects São Paulo and Rio de Janeiro, CRT and Concer, the two main connections between Rio de Janeiro and Minas Gerais. The structuring and bidding of another 6 concessions – totaling more than 3,000 Km of road network in the State of Paraná – are also part of the mandate.
In the BR-153 road project, IFC supported EPL in the preparation of technical (engineering, traffic, and road safety analysis), legal, ESG, economic-financial feasibility studies, as well as in the preparation of the bidding documents and the promotion of the project. This concession marks the first project that encompasses a brand new regulatory model recommended by IFC, which includes, among many contractual and operational innovations, risk allocation based on project inherent characteristics (rather than the usual non-specific risk matrix), a bankability package aligned with international standards and a hybrid auction model that considers the combined criteria of a limited tariff discount followed by highest upfront concession fee.
The private sector investments in this project will guarantee the maintenance and expansion of the road capacity, technological resources, improvement of services to users, and improvement of the fluidity and safety of the road. The BR-153 road will be the first federal road to fully comply with IFC's Environmental and Social Performance Standards, to include resting areas for truckers, and to use iRAP (International Road Assessment Program), an international methodology that aims to reduce the likelihood of accidents by classifying infrastructure safety levels and defining high-performance engineering improvements in road safety.
"With this project, IFC aims to contribute to the improvement of the infrastructure in Brazil, offering credibility and transparency, attractive returns, and adequate risk allocation for the investor, while, at the same time, helping to promote economic development, job creation, and benefits to the users", says Carlos Leiria Pinto, IFC's Country Manager in Brazil.
"During the preparation of the concession, we adopted technological and contractual innovations based on the best national and international practices in the sector, to develop a new generation of road concessions to benefit millions of users through a better quality of service and reduce transaction costs to foster economic development", says Richard Cabello, PPP Manager for LAC.
The project was structured by IFC with the financial support of the Global Infrastructure Facility (GIF), a global collaboration platform that integrates efforts to boost private investments in emerging markets, and PSPInfra, a partnership between BNDES, IDB and IFC created in 2007 to improve the offer of public services through the development of infrastructure in Brazil, with the participation of the private sector. The structuring of the project was under the responsibility of EPL - Empresa de Planejamento e Logística S.A, Ministério da Infraestrutura and ANTT.
IFC has been investing in Brazil's private sector since 1957, addressing the country's most critical development challenges, including those of urbanization, social inclusion, healthcare, educational services, competitiveness and productivity, and management of natural resources.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
About PSPInfra
PSPInfra, created in 2007, is a partnership between the Inter-American Development Bank (IDB), the Brazilian Development Bank (BNDES), and the International Finance Corporation (IFC) to improve the offer of public services through the development of infrastructure in Brazil, with the participation of the private sector. PSPInfra supports the structuring and implementation of innovative projects conducted in Brazil in line with the best national and international standards.
PSPInfra's partners invested their own financial resources to pursue a common goal and cooperate in strategic decisions that steer the partnership's work. They have complementary roles that ensure the success of each project. BNDES contributed with a substantial portion of the resources available, and IFC
has been acting as the lead advisor in transactions, with BNDES co-leading certain projects. The execution of new projects under the PSPInfra umbrella may adopt different formats. Said projects can either be led by IFC or have the shared leadership of IFC and IDB and/or BNDES.
Stay Connected
www.ifc.org/lac
www.twitter.com/IFC_LAC
www.linkedin.com/company/ifc-américa-latina-y-el-caribe
www.facebook.com/IFCwbg
www.instagram.com/ifc_org/
www.youtube.com/IFCvideocasts
www.twitter.com/IFC_org
www.ifc.org/SocialMediaIndex
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