Brazil Sets Minimum Bid For Airport Auction

October 13, 2011

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Operators interested in running Brazil's largest airport will be required to make a minimum bid of USD$1.3 billion, Brazil's aviation authority said on Thursday.

Brazil, which has seen double-digit annual growth in air traffic, is planning to expand and update its main airports ahead of the 2014 World Cup and 2016 Olympics in Rio de Janeiro.

An auction to bid for the rights to build and operate three airport terminals is tentatively scheduled for December 22, although authorities say the date depends on rulings by government watchdogs.

Investors have been watching closely the bidding amid broader uncertainty over Brazil's investment climate. A heavy government hand in several industries has raised concern with some private investors.

Earlier this year the government said that Infraero, the state-owned company that currently runs most airports, will maintain a veto right on strategic decisions in the joint-ventures it will form with winning bidders. Infraero will hold a minority stake in these joint ventures.

The winning bidder for Guarulhos, Sao Paulo's main international airport, will be charged 10 percent of gross revenue over a 20 year contract. In addition to airport fees, the operator will earn BRR804 million reais in revenues by 2032, compared with an estimated BRR373 million reais in 2012, Secretary of Civil Aviation Wagner Bittencourt said.

Required investments at Guarulhos total BRR5.2 billion reais.

Brazil will also auction off concessions at Viracopos airport, in Sao Paulo state, as well as at the airport in the capital Brasilia.

Bidders at Viracopos, which requires investments of BRR9.9 billion reais, will have to offer at least BRR521 million reais and will pay 5 percent of gross revenues over a 30 year contract.

(Reuters)