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Legal Update

New Regulation over Brazilian Federal Highways

20 September 2017
Tauil & Chequer Legal Update

The Brazilian Government issued on September 19, 2017 Provisional Measure No. 800/2017 (“MP 800"), providing new regulation over federal highway concessions, focused on the revision of investment obligations.

The aim of MP 800 is to assist highway concessions that are facing financial and operational problems, which may result in the early termination of the concession agreement. Those problems are commonly related to: delays in the BNDES’ financing, delays in the issue of environmental licenses (required for civil works and operation); and a decrease in road traffic as a result of Brazil’s economic crisis.

Through this revision, new investments may occur over a maximum period of 14 years and should be followed by an economic-finance rebalance of the contract, through one of the following measures:

  • Reduction in the toll fee (only after the conclusion of the new investments);
  • Reduction of the concession term; or
  • A combination of the referred measures.

MP 800 fixes a one year term for the federal highway concessionaire to request the investments revision.

If the investments revision is approved, the concessionaire will be prohibited from requesting the re-auction of the concession (and the “devolution” of the highway to the Government), which is regulated by the Federal Law No. 13,488/2017.

Authors

  • Bruno Aurélio
    T +55 11 2504 4232
  • Eduardo Lima
    T + 55 11 2504 4238
  • Carlos Motta
    T +55 11 2504 4210
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