The Brazilian Government has sanctioned Law No. 13,448/2017 (“new Law”) which regulates the renewal and the re-auctioning of concessions that qualify for such purposes in the Investment Partnership Program – PPI. This law originated from the Provisional Measure No. 752/2016 (“MP 752”).
The new Law 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). These provisions regulate port, airport and railway concessions under PPI.
Certain provisions of MP 752 have been modified in the final wording of the new Law — the following items highlight the main revisions:
(i) All sectors (highways, airports, railroads)
- Early renewal should only be executed if it is expressly provided for the concession agreement;
- The adjustment of concession agreements in order to upgrade or expand the services are not limited by the provisions of the Federal Bidding Law (Law No. 8,666/93, Article 65, paragraphs 1 and 2);
- The requirements for the renewal of railroad concessions have been modified, particularly with regards to the guarantee of rights of access by third parties to the railroad;
- Further regulation of assets related to railroad concessions;
- Subconcession (subconcessão) of the maintenance and operation of specific railway stretches to public entities (states and municipalities);
- Possibility of construction and operation of new railway stretches linking areas with high cargo production (and absence of railway line supply).
Observations in this update about Brazilian law are by Tauil & Chequer Advogados and are not intended to provide legal advice. Any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.