New regulation on feasibility studies
On April 2 2015 the federal government issued Federal Decree 8,428. The decree regulates expression of interest procedures, which allow private companies to perform feasibility studies for infrastructure projects at their own expense, on authorisation by the relevant government entities.
By issuing this decree, the federal government has followed in the footsteps of many states and municipalities(1) which have already regulated expression of interest procedures in order to facilitate new infrastructure projects in their jurisdictions.
Expression of interest procedures have a legal basis in the Concession of Public Services Law (Federal Law 8,987/95) and the Public-Private Partnership Law (Federal Law 11,079/2004). These procedures allow companies performing studies for a government entity to:
- participate in the future concession tender launched by the entity; and
- be remunerated by the future winning bidder, if the studies are used in the final project model and the winning bidder is not the same company that performed the studies.
New phase of Logistics Investment Programme
In an attempt to foster investment in infrastructure, the federal government recently launched the second phase of its Logistics Investment Programme. It aims to attract investments of approximately $64 billion in airports, toll roads, ports and railways.
In the aviation sector, expressions of interest were the first phase of a new round of airport concessions involving airports in Salvador, Fortaleza, Porto Alegre and Florianopolis. The Civil Aviation Secretariat published a request for expressions of interest on June 10 2015. After receiving authorisation, companies will have 180 days to deliver their studies.
Likewise, a new round of toll road concessions will be based on past studies and those still under analysis. In addition, the Ministry of Transport published 11 new expressions of interest on June 10 2015. This will also occur with regard to railway projects.
In this context, the enactment of Federal Decree 8,428/2015 is part of the government's effort to attract more private investment in infrastructure projects. Additionally, the decree paints a clearer picture from a legal perspective, which may give interested companies the extra incentive needed to participate in infrastructure projects.
Advantages of expression of interest procedures
Although expression of interest procedures have successfully been used in past projects, no consensus among infrastructure players exists.
The use of expression of interest procedures in new infrastructure projects has been shown to increase public acceptance and project credibility. Further, these procedures bring projects closer to the reality of the relevant sector – in particular, from a technical and financial standpoint.
For further information on this topic please contact Claudia Elena Bonelli or Ana Cândida de Mello Carvalho at TozziniFreire Advogados by telephone (+55 11 50 86 50 00) or email (firstname.lastname@example.org or email@example.com). The TozziniFreire Advogados website can be accessed at www.tozzinifreire.com.br.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.