09/10/2017 - Artesp
The São Paulo State Transportation Regulatory Agency (Artesp) published the Request for Proposals (RfP) for the international concession of the Northern Stretch of the Mario Covas Road Ring (SP 021). The document covers investments of BRL 581.5 million to operate the road ring with .high standard resources throughout the 30-year concession. The winning bid will be determined according to the highest upfront concession fee, considering the amount of BRL 462,367,014.00 as the minimum bid. The public session of the sale of the Northern Stretch will be held on January 10th, at the headquarters of B3 (former BM&F/Bovespa). National and foreign companies, investment funds and supplementary pension plans are welcome to bid, either independently or by means of teaming arrangement. The full text of the invitation to bid is available online at Artesp’s website: www.artesp.sp.gov.br/transparencia-novas-concessoes-rodovias-rodoanel-norte.html.
The concession model is based on the criteria previously implemented in the two other bids for São Paulo state roads organized in 2016. The concessions of the São Paulo Midwest Roads and the Road of the Shoes Industry resulted in offers with premiums of 138% and 438%, respectivelly – the latter with a minimum upfront concession fee of BRL 450.9 million, amount close to the minimum bid for the North Stretch, which confirms the successful efforts made by the São Paulo State Government to implement rules that enabled the participation of new investor profiles and which have increased the legal and economic-financial secutiry of the projects. The model was developed with the support of the IFC (International Finance Corporation), member of the World Bank Group, as well as of independent international consulting firms.
Guarantees and legal security
The Northern Stretch concession includes contractual innovations that have marked the 4th Phase of the São Paulo Road Concession Program, along with new collateral mechanisms in line with the best international practices. As the other RfP’s bid published this year, prepared with IFC’s support, the Northern Stretch concession includes a sophisticated FX protection mechanism that reduces risks for investors raising funds in foreign currency. Moreover, the concession once again includes the possibility of signing a three-party agreement between the Authority, the Concessionaire and the Lender (s), with step-in rules for the latter to take over management, even if temporarily, in the event of Concessionaire’s contractual nonperformance, in addition to rules for eventual replacement thereof, as well as clear early termination and compensation criteria for the parties. Such measures improve the overall Project’s bankability.
Ordinary revisions were also maintained every four years to readjust the investment plans, insurance plans, collateral/performance bonds and performance indicators. The idea is to bring closer the contractual reality to society’s true demands.
In addition to all the rules that have already been implemented in the São Paulo State Road Concessions, the RfP includes a new collateral mechanism, whereby 28% of the upfront concession fee will only be released to the Government together with the Operating Permit of the first segment of the Northern Stretch, when the Concessionaire will effectively begin its activities on the highway. The remaining balance of 72% will be released in December 2019, net of any sums related to eventual outstanding economic-financial rebalance amounts. Liquidity has also been enhanced with the expected 12-month withholding of the variable concession fee, which is set at 15% for the first time, and may be used for any rebalancing that may be necessary.
The new round of concessions of São Paulo State roads also includes a new practice, which has also been implemented for the Northern Stretch of the Road Ring, which refers to the reduction of the technical qualification requirements, including the possibility of qualified subcontracting. For instance, such criterion has enabled investment funds to bid in São Paulo concessions – as was the case of Pátria Investimentos (via Fundo III de Infraestrutura), which, in March 2017, was the winner of the Midwest Roads Lot auction, at a bid of BRL 917,2 million for the upfront concession fee first installment, with a premium of 130.89%.
Concession of the Northern Stretch of the Road Ring
The last segment of Brazil’s largest road ring will total 47.6 kilometers of axis an accesses, connecting the West and East Stretches of the Road Ring. The final portion of the Northern Stretch is being completed by DERSA – Desenvolvimento Rodoviário S/A. The new road is key to connect the Santos Port – Brazil’s largest port – to the Gurarulhos Airport, also the country’s largest airport. Above all, the purpose thereof is to offer such connection without having to cross the city of São Paulo. The road ring begins on the junction with Avenida Raimundo Pereira Magalhães, former Campinas – São Paulo highway (SP-332), and ends on the intersection with highway Presidente Dutra (BR-116).
The stretch includes an access to highway Fernão Dias (BR-381), in addition to the exclusive 3.6 km connection to the Guarulhos International Airport, Brazil’s busiest airport. The four stretches of the Road Ring total 180 kilometers (including the accesses) and connect the high-demand road corridors comprised of highways Bandeirantes, Anhanguera, Castello Branco, Raposo Tavares, Régis Bittencourt, Imigrantes, Anchieta, Ayrton Senna, Dutra and Fernão Dias. CCR Rodoanel operates the West Stretch, while SPMar operates the South and East Stretches.
Benefits for the Users
The concession offers several innovations in order to ensure users receive international level highway services. The concessionaire will offer Wi-Fi connection on the Northern Stretch, so that users receive information on the system, such as the traffic and weather conditions or on any eventual road blocks. The highways will also be fully monitored by smart cameras to ensure greater traffic safety and flow. The Northern Stretch of the Road Ring will be Brazil’s fist entirely illuminated highway, in its over 47 kilometers.
There is also the possibility of the concessionaire implementing flexible fees with lower prices, according to the level of traffic, for example. Such practice not only translates into savings for the users, but may also be decisive in balancing out the traffic flow, removing a considerable number of vehicles at peek hours, which would then use the highways when there is less traffic. Users who choose electronic payment will also receive a 5% discount on the toll fees.
The concessionaire shall also synchronize the data of its smart monitoring systems with Artesp’s Information Control Center for supervision purposes, as well as to improve the Accident Reduction Program of the São Paulo State highways. The concessionaire must implement a traffic monitoring system including the collection of information on volume, speed and weight per axis, with sensors that provide for such survey even with respect to moving vehicles. Digital systems will also be implemented for Artesp to manage and monitor the project and construction works on the Northern Stretch, including an online portal to register claims and new requests made by civil society, subject to Artesp review.
The purpose of the aforementioned set of rules is to maintain the provision of public services according to the quality standards determined by the users of the São Paulo highways under concession agreements, which ensures 19 of the State’s highways to be among Brazil’s 20 best highways in the last ranking prepared by the National Transportation Confederation (CNT).
New São Paulo Concessions
The concession of the Northern Stretch of the Road Ring is the third bidding process of the 4th Phase of the São Paulo Highway Concession Program, whereby BRL 110.1 billion have been invested in construction works and to operate the currently 7.2 thousand kilometersunder concession agreements. Such investments have resulted in safety (62% drop in the mortality rates since 2000) and comfort for the users.
Artesp regulates and supervises the São Paulo program for roads, airports and intermunicipal collective transportation concessions in the State of São Paulo. Artesp’s activities covers 7.2 k kilometers of roads managed by 21 concessionaires, in addition to over one thousand intermunicipal collective transportation of passengers and the concession of five regional airports.
ARTESP - Assessoria de Imprensa
(11) 3465-2104 / 2105 / 2364