The privatization of Infraero airports began in 2011 with the auction of the São Gonçalo do Amarante airport in Rio Grande do Norte (the runways were completed, and terminals and complementary works were lacking), followed in 2012 by Guarulhos, Brasília and Viracopos, and in 2014 by Galeão and Confins.
In these last two rounds, a model was adopted in which Infraero participated with 49% of all consortia: in the auction, it was obliged to follow the highest granting bid, even if it did not make economic-financial sense; and in the construction and operation of the new terminals, it had limited interference, even in conditions of conflict of interest (between shareholders whose focus was the construction of new terminals, and those focused on operating an asset for 30 years).
This distortion in the model was corrected as of the 4th Round, in 2017 (Porto Alegre, Florianópolis, Salvador and Fortaleza), but only in the new concessions. In the others – then responsible for 43.5% of passengers in the country – Infraero’s share remained, whose value has declined sharply in recent years.
In all rounds, including the 5th at the beginning of 2019 and the 6th in April 2021, there was considerable competition for the assets, and in the latter, CCR presented very incisive bids to win the Central and South Blocks, and the average goodwill of the auction was 3,823% (in relation to the minimum value).
The 7th round, this Thursday (18), had in fact little competition and focused only on the North Block II (Belém and Macapá), between two bidders. In the General Aviation Block, an investment fund was present at the auction, and in the SP-MS-PA-MG Block, anchored at Congonhas airport –the most attractive airport in the system–, there was a single contender.
Even so, the auction was successful, given the fact that the sector is one of the most impacted by the pandemic and the moment the country is experiencing. The combination of high inflation and cost of capital, volatility and low visibility for the coming years of the world economy and of Brazil, affects returns and the possibility of financing investments, unless one is willing to pay very high risk premiums.
In the case of Congonhas, the concession model added four airports in Pará, three in Minas Gerais and three in Mato Grosso do Sul to the São Paulo anchor: the attractiveness was reduced not only by the complexity of the block – and then the difficulty of establishing a value–but low asset synergy and limited scale and scope gains.
Congonhas should have been auctioned separately, and the proceeds used for PPPs (public-private partnerships) of three regional blocks (MG, MS and PA) in a later round.
A more benign moment and a better designed model would make a difference; but the obstacles the sector faces in attracting investment go further.
No new players are seen in the infrastructure sector. When there is an entrant – as in the Belo Horizonte Rodoanel PPP – it is a fact that draws attention, an exception that proves the rule. In the auction of the crown jewel of federal highways, in October 2021, there was only the incumbent (CCR) and Ecorodovias, and limited competition. This time, the only contender in the case of the Congonhas block was Aena, a Spanish company that already operates six airports in the Northeast bid in the 5th round.
The lack of entrants calls attention: in this auction there was a relevant novelty, as for the first time an infrastructure investment fund was the investor in an airport asset.
There should, however, be many others, and the country should be able to attract large funds and raise funds at scale for the sector. This does not happen, either because we are not part of the OECD – and therefore we do not follow certain rules of good governance, including in terms of transparency and the fight against corruption –, or because of the country’s reputational destruction in recent years, due to the lack of understanding of the federal government of the importance of the commitment with the environment and the Amazon, as well as with the native peoples, and that leads many investors to move away from the country.
The government that takes over in 2023 is expected to take a different stance and take concrete actions to restore the country’s credibility, join the OECD and move towards a more open and competitive economy.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
