Galeão was doomed to failure, it was to throw money into the incinerator, says minister

One day after the announcement of the return of the concession for the Tom Jobim International Airport, Galeão (RJ), Minister Tarcísio Freitas (Infrastructure) stated that the amount paid in 2013 by the consortium led then by Odebrecht was unrealistic and that there would not be enough revenue to pay the grant.

Galeão was offered at the time for a minimum value of R$ 4.8 billion and bought by the consortium for R$ 19 billion. According to Tarcísio, this represents an annual grant payment of R$ 1.2 billion for an asset that generates R$ 900 million in gross operating revenue and R$ 400 million in margin per year.

“How can equipment that generates BRL 400 million in margin pay BRL 1.2 billion in grants? That’s throwing money at the incinerator. Obviously, Galeão was doomed to failure, it had a very bad contract”, said the minister this Friday (11) during a master class at FAAP (Centro Universitário Armando Alvares Penteado) to launch the postgraduate course in Agribusiness 4.0.

“This stems from the belief that you could be irresponsible in a bidding process and that the government would find a way around it later. This is the belief that prevailed in Brazil for a long time.”

The concessionaire RIOgaleão announced on Thursday (10) the request to the federal government to return the Galeão, citing the impacts of the economic crisis and Covid-19 on the airline sector. The terminal, located on Ilha do Governador, has been facing difficulties in resuming operations. The term of the contract would run until 2039.

Currently, RIOgaleão is controlled by Changi Airports, from Singapore, which has a 51% stake in the business. Infraero has the remaining 49%.

After the company’s announcement, Tarcísio said that the terminal will be re-tendered in 2023, on a block with Santos Dumont, in downtown Rio. The idea is that both airports have the same operator. In practice, the measure postpones the Santos Dumont auction, which was scheduled for the first half of 2022.

The concessionaire will continue to operate the terminal until a new operator is defined at auction by the federal government.

This Friday, Tarcísio also spoke about the concessions made by the government during his administration, noting that the country should reach the end of the year with R$ 1 trillion in contracted projects.

In the next 15 years, for example, the rail mode is expected to double its share of the transport matrix, to 40%, with the help of new legislation authorizing the private sector. With that, he expects a reduction in the so-called Brazil Cost of around 35%.

According to the minister, this and other initiatives, such as pension and labor reforms, will ensure the resumption of growth in the coming years.

“We have R$ 1 trillion of investment contracted in infrastructure. We are going to have logistics. A series of reforms have been carried out. We are paving the way for strong growth. Anyone who is betting on low perennial growth is betting wrong”, he said.