The Brazilian Government has issued Provisional Measure No. 752/2016 ("MP 752") to regulate the renewal and the re-auctioning of concessions qualified for such purposes in the Investment Partnership Programme – PPI, including some concessions of highways, airports and railways.

The MP 752 regulates specific topics related to concessions: concession renewal; early concession renewal (in exchange for new investments) and the re- auction of existing concessions (early termination of the concession agreement, by mutual agreement between the Parties, and execution of a new agreement through a new bidding process).

The MP 752 opens a window of opportunity for investors and companies involved in the aforementioned sectors, taking into account:

  1. new rules regulating concessions renewal, which benefits concessionaires that intend to maintain their concession additional period;
  2. concessionaires which have financial problems or those who are facing difficulties in the execution of an agreement may proceed with an early termination by mutual agreement; and
  3. existing concessions which are terminated early can be relaunched, thereby broadening the opportunities for new players;

The table below synthesizes the main aspects of the new regulation regarding the concession of highways, airports and railways.

Highways Railways Airports
  • Term extension rules provided in the concession agreement;
  • Without any previous renewal;
  • The renewal is possible only once;
  • Not applicable to the renewal related to the economic-financial rebalancing of the concession.
  • New investments not originally addressed in the concession agreement.
  • New investments not originally addressed in the concession agreement;
  • New provision on the concession agreement to overcome logistic and operational issues;
  • The concessionaire should guarantee access to the rail-based network to third parties ;
  • Service Level Agreements shall be attended by the concessionaire.
  • Scenarios: concessionaires that have financial problems or those who are facing difficulties in the execution of the agreement.
  • By mutual agreement between the concessionaire and the grantor;
  • New bidding process. The existing concessionaire (Specific Purpose Enterprise – SPE) or its shareholders that hold at least twenty percent (20%) of the total voting capital shall not participate in the new bidding process.
Arbitration rules
  • Disputes among the concessionaire and the granting power related to the matters regulated by the MP 752 shall be solved by arbitration or other alternative means of dispute resolutions.
  • The concession agreements which do not have arbitration clause may be added to have such provisions.

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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.