Daniel Bland

With public-private partnerships (PPPs) in Brazil on the rise over the last decade, companies interested in upcoming contracts with federal, state and municipal governments must to their homework first.

In this week′s Q&A, legal expert José Virgilio Enei explains the history of PPPs in the country and who is launching them.

BNamericas: PPP contracts seem to be increasing in Brazil. Could you define infrastructure PPP in the country and how long have they been around?

Enei: PPPs in Brazil could be seen in two ways. In a broad sense, the expression may be read as comprising any sort of collaboration between private and public sectors for the development and implementation of a relevant project.

In this case, ordinary concessions and mixed capital entities would be examples of those arrangements. These broad collaboration arrangements have been in place since Brazil was discovered.

On the other hand, in a narrow sense, PPPs are specific types of contractual arrangements between the public and private sectors which are governed by federal law 11.097, of December 2004, also known as the PPP law.

They are long-term agreements, from 5-35 years, that differ from ordinary concessions in that remuneration of the private concessionaire comes in total or in part from the government itself.

BNamericas: Could you tell me how many PPPs have been accomplished since the 2004 law?

Since 2004, several hundreds of PPP projects have been studied and discussed. However, only approximately 75 have been actually contracted and executed.

BNamericas: Are PPPs more common with federal, state or municipal governments?

Enei: In general, Brazil′s federal government has not been prioritizing PPPs.

Instead, it has been focusing on ordinary concessions or other arrangements that are sector specific such as regulated power purchase agreements in the power sector, governed by law 10.848, or exploration and production concessions in the oil and gas sector, governed by law 9.478.

Therefore, all PPPs to date - with the exception of a datacenter contracted by federal banks Banco do Brasil (BB) and Caixa Econômica Federal (CEF) - have been executed by state or municipal governments.

BNamericas: What infrastructure sectors have the most PPPs?

In terms of the number of projects, basic water and sanitation is a major concern for most Brazilian cities so this has been the most popular sector for PPPs.

This includes those for solid waste collection, treatment and disposal, as well as for potable water supply and treatment, and sewage collection and treatment systems.

As for investment amounts, some of the most capital intensive PPPs have been executed for the transportation sector, particularly for subway lines. For instance, São Paulo state′s metro line No. 6 in state capital São Paulo will require investments in excess of 10bn reais [nearly US$3bn].

I′d also like to point out that sporting facility PPPs have also been popular among federative states, to include the construction and operation of soccer stadiums hosting the 2014 World Cup. Six out of the 12 stadiums selected for the sporting event were constructed or renovated through PPP agreements.

About José Virgilio Enei

Besides being a partner since 2004, José Virgilio Enei is the co-head of the infrastructure and energy department of São Paulo law firm Machado, Meyer, Sendacz e Opice Advogados. He also holds an LLM from University of Virginia and a master′s degree in commercial law from the University of São Paulo.

About the company

Founded in 1972, Machado, Meyer, Sendacz e Opice operates in all areas of law, offering legal assistance to both Brazilian and international clients, including large corporations, financial institutions and government bodies.

Made up of approximately 350 lawyers, it has offices in São Paulo, Rio de Janeiro, Brasília, Belo Horizonte and Porto Alegre, as well as New York.

(BNamericas - 12.08.2015)

(Notícia na Íntegra)