Reforms Drive Global Investment in Brazil’s Roads

Innovative public-private partnerships have brought in investment and expertise to expand infrastructure in Sao Paulo. © ARTESP 

The State of Sao Paulo is often called “the locomotive of Brazil” because it’s responsible for almost one-third of the nation’s GDP. But the symbol of economic progress might be about to change: These days, it’s not a train but Sao Paulo’s road networks that are driving the next phase of infrastructure investment in Brazil.

IFC-led public-private partnerships (PPPs) are helping the government of the state steer this path forward. In a country whose recent economic downturn prompted officials to search for original ideas that would attract a wider range of investors, IFC is helping design a new model for road concessions—bringing in massive private investment and expertise from international investors.

IFC was mandated by the State of Sao Paulo government to structure and tender four brownfield road PPPs totaling 1,500 kilometers. Meeting this goal required IFC to incorporate international benchmarks, and help the state government overcome barriers that historically have closed this sector to international private investors.

IFC’s model increased transparency, enhanced bankability, and protected the concessions against currency fluctuations and changes in technology. As obstacles fell, Brazil attracted high-quality international investors to its road market despite the nation’s political and economic situation.

The first two roads were auctioned in 2017, and an auction for a third road was completed early this year. The PPPs set records for concession fees to the government: Bidders for the first two roads offered a combined $860 million in fees and $3 billion in investment; the winner of the bid for the third road offered more than $270 million in concession fees and will invest about $180 million during the 30-year concession. Total new investment is expected to be around $4 billion.


“We Had to Innovate”

The State of Sao Paulo is a model for innovation in infrastructure development through private sector participation, and it is influential enough to re-shape PPP design and financing across Brazil. Although it was still challenging to attract credible investors, the state government’s good fiscal policies and willingness to innovate convinced many investors that the projects were a risk worth taking.

“We knew we could not simply wait for the crisis to end,” says Karla Bertocco, Undersecretary for Partnership and Innovation of the Sao Paulo State Government. “We saw this as an opportunity to change how we deliver the infrastructure our state needs by bringing in international investors and world-class road operators. We had to innovate.”

IFC’s innovations in Sao Paulo are now redirecting road PPPs at the national level: IFC has been mandated by the federal government to replicate its work on four other federal roads, all part of the World Bank’s road sector reform program.


Transforming Brazilian Business

The Sao Paulo PPP demonstrates the potential of leveraging private sector investment and helping to optimize public resources. The project, as structured, is helping transform the sector in fiscally, environmentally, and socially sustainable ways, crowding in private sector financing and management solutions.

IFC was effective in part because throughout the PPP process, we tailored our approach to the realities on the ground. As Brazil’s O Estado de S. Paulo newspaper wrote, “It is somewhat surprising that investors took huge long-term financial commitments, especially in the infrastructure sector, with companies still waiting for signs that the economy will emerge from deep recession.” The article explains that this was accomplished because “contractual innovations were adopted to improve financing conditions, defined in partnership with the IFC.” (Read the original article, in Portuguese)

These innovations in project bankability earned IFC the "Most Innovative Idea of the Year" Award from PPP Awards & Conference Brazil 2017. LatinFinance named IFC the region’s Best Multilateral Development Bank of 2017, citing IFC’s “innovation and commitment to Latin America.”

To read more about IFC’s work in PPPs, visit

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Published in April 2018.


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