Brazil to Award $1.8 Billion Highway Concession

Highways Leading Brazil‘s Infrastructure Investment surge, EY-Parthenon Report Reveals

São Paulo, Brazil – Highways are set to be the primary recipient of infrastructure investment in Brazil over the short term, according to the latest biannual Infrastructure Barometer, a report jointly published by consultancy EY-Parthenon and the infrastructure association Abdib.This marks a notable shift, with highways surpassing the water sector for the first time in seven editions as the most anticipated investment target.

The report indicates that 46.6% of respondents expressed a positive outlook for the highway sector, closely followed by water services at 45.4% and electric power at 40.6%. This perception is based on insights from infrastructure executives regarding expected investments in the coming three years.

Gustavo Gusmão, head of infrastructure, PPPs, and the public sector at EY-Parthenon, attributed this trend to a dual focus on federal and state initiatives. “Through 2026, Brazil’s highway sector is set to continue attracting strong interest and investment from the private sector,” Gusmão explained to BNamericas.”Two main factors are driving this trend.First, the transport ministry has maintained close engagement with market players.It has actively promoted dialog, showcased Brazilian projects abroad, and built a broad portfolio of highway initiatives.”

He further highlighted the crucial role of state governments, citing the active involvement of states such as Mato Grosso, Minas Gerais, Paraná, and São Paulo. “These state-level agendas have complemented federal auctions and expanded the scope of highway concessions,” Gusmão added.

The article also touches upon the re-offering of a highway stretch previously returned to the government. The original concession for this segment, part of Rota Sertaneja, was held by Conceives, a unit of infrastructure firm Triumph. Conceives handed back the concession in 2020, citing financial unviability. Under Brazilian regulations, such returns are subject to assessment by the land transport regulator ANTT to determine any financial compensation. The report notes a pattern of contract returns, particularly for concessions awarded in the early 2010s, where original traffic and revenue projections failed to materialize, impacting concessionaires’ cash flow and ability to meet investment commitments.

What are the key financial obligations and timelines for the winning bidder of the BR-153 highway concession?

The Scope of the Infrastructure Project

Brazil is set to award a notable highway concession valued at $1.8 billion (approximately BRL 9.3 billion). This aspiring infrastructure project focuses on a crucial 750-kilometer stretch of the BR-153 federal highway, connecting the states of Goiás and Minas gerais. The concession, managed by the Brazilian government’s investment partnerships program (PPI), aims to modernize and expand this vital transportation artery. This represents a major investment in Brazil’s road infrastructure, impacting logistics, trade, and regional progress.

Key Details of the Concession Agreement

The 30-year concession contract encompasses several key obligations for the winning bidder:

Duplication of Highway Sections: A significant portion of the project involves duplicating existing single-carriageway sections of the BR-153, enhancing capacity and safety.

Maintenance and Repair: The concessionaire will be responsible for the ongoing maintenance, repair, and operational upkeep of the entire 750km stretch. This includes routine inspections, pothole repairs, and emergency response services.

New Infrastructure: The project includes the construction of 15 overpasses and underpasses,improving traffic flow and reducing congestion.

Toll Collection: The concessionaire will be authorized to collect tolls to recoup their investment and fund ongoing operations. Toll rates will be regulated by the government.

Environmental Considerations: strict adherence to environmental regulations is a core requirement, with the concessionaire responsible for mitigating any environmental impact.

Participating Companies and Bidding Process

Several major infrastructure companies have expressed interest in the concession, including:

CCR (Companhia de Concessões Rodoviárias)

Ecorodovias

NovaWay

Equipar

Pátria Investments

The bidding process, overseen by the National Land Transport Agency (ANTT), utilizes a competitive auction format. The winning bid will be resolute by the lowest proposed toll rate, ensuring value for road users. the auction is scheduled for July 29th, 2025. Preliminary qualification of bidders has already been completed, ensuring financial and technical competence.

Economic impact and Benefits of the Highway Upgrade

This $1.8 billion investment is projected to deliver ample economic benefits:

Reduced Logistics Costs: Improved highway conditions will lower transportation costs for businesses, boosting competitiveness.

Increased Trade: Enhanced connectivity will facilitate the movement of goods between Goiás, Minas Gerais, and other regions, stimulating trade.

Job Creation: The construction and operation phases of the project will generate numerous employment opportunities.

Regional Development: Improved infrastructure will attract investment and promote economic growth in the surrounding areas.

Agricultural Sector boost: the BR-153 is a critical route for transporting agricultural products.Upgrades will reduce spoilage and improve efficiency.

Brazil’s Infrastructure Investment Landscape

Brazil has been actively seeking to attract private investment in its infrastructure sector. The PPI program has been instrumental in identifying and structuring viable concession projects.Recent successes include concessions in ports, airports, and railways. This highway concession is part of a broader effort to modernize Brazil’s transportation network and improve its overall competitiveness. according to data from the Ministry of Infrastructure, Brazil aims to attract over $50 billion in infrastructure investment by 2026.

Challenges and Considerations

Despite the potential benefits, the project faces several challenges:

Environmental Licensing: Obtaining necessary environmental licenses can be a lengthy and complex process.

Land Acquisition: Acquiring land for highway expansion may require negotiations with numerous landowners.

Construction Delays: Unexpected delays due to weather or logistical issues could impact project timelines.

Financial Risks: Fluctuations in interest rates and exchange rates could affect the financial viability of the concession.

Political and Regulatory Uncertainty: Changes in government policies or regulations could create uncertainty for investors.

Case Study: The BR-040 Concession

A relevant case study is the BR-040 concession, awarded in 2013. This project, also involving highway duplication and maintenance, demonstrated the potential for accomplished public-private partnerships in Brazil’s infrastructure sector. While facing initial challenges related to environmental licensing and land acquisition, the BR-040 concession ultimately delivered significant improvements in highway conditions and reduced travel times. Lessons learned from this project are being applied to the BR-153 concession to mitigate potential risks.

Impact on Logistics and Supply Chains

The BR-153 highway is a vital link in Brazil’s logistics network. It connects major agricultural producing regions with key consumer markets and ports. The upgrade will considerably improve the efficiency of supply chains, reducing transportation times and costs. This is especially important for perishable goods, such as fruits and vegetables, where timely delivery is crucial. The improved highway will also facilitate the movement of industrial products and raw materials.

Future Outlook for Brazil’s Highway Network

The BR-153 concession is just one of several highway projects planned in brazil. The government is actively seeking to attract investment in other key transportation corridors. Future projects are expected to focus on expanding highway capacity, improving road safety, and integrating bright transportation systems. The long-term goal is to create a modern, efficient, and sustainable highway network that supports Brazil’s economic growth.