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).