Infrastructure News

07/25/2018

Local consortium wins Brazil's first rehabilitate/maintain road concession

Estrada do Feijão Bahia, a consortium comprising Paviservice and SVC Construções, has been awarded the concession contract to rehabilitate and maintain the BA-052 road in Bahia, a state in the north-east of Brazil.

Estrada do Feijão Bahia will invest approximately BRL700 million (US$185.8 million) throughout the 20-year contract.

The consortium was the sole bidder for the project, which was auctioned on the stock exchange in São Paulo by B3.

The project concerns 462km of the BA-052, also called Estrada do Feijão, which connects the cities of Feira de Santana and Xique-Xique. The consortium will also rehabilitate and maintain 85km of the BA-160 between Xique-Xique and the ferry crossing point to the municipality of Barra; and construct a new bridge over the São Francisco River that will connect the municipalities of Barra and Xique-Xique.

By delivering an alternative to the ferry crossing, the construction works will optimize the travel time of pedestrians and passenger and commercial vehicles, in addition to making the travel between the municipalities safer. Inhabitants from 18 municipalities in Bahia will benefit from the roadway improvements.

Estrada do Feijão Bahia will be compensated through annual availability payments of up to BRL71.1 million (US$18.9 million), according to the consortium's bid. To finance the initial capital costs, the group is seeking financing from Banco do Nordeste. The CEO of Paviservice has publicly stated that the consortium is looking to secure BRL300 million (US$79.6 million), to complement a BRL80 million (US$21.2 million) equity investment.

According to the International Finance Corporation (IFC), who advised the State of Bahia (the contracting authority), through the Secretariat of Infrastructure, on modeling and structuring the project, this is the first time that short-term contracts for the rehabilitation and maintenance of roads have been transformed into a Public-Private Partnership (PPP) in Brazil.

The IFC was supported by the Inter-American Development Bank (IDB) and the National Bank for Economic and Social Development (BNDES) through the Private Participation Promotion Program, which aims to support the implementation of infrastructure projects in Brazil.