São Paulo, Brazil, July 20, 2018—
The consortium Estrada do Feijão Bahia is the winner of the concession
auction for the rehabilitation and maintenance of roads in the State of
Bahia, in Brazil. The auction of BA-052, known as Estrada do Feijão
(or “Bean Road”), was conducted yesterday in São Paulo by B3, the
Brazilian stock exchange. The winner consortium is formed by Paviservice
and SVC Construções, two medium-sized Brazilian construction companies.
IFC, with the support of the World Bank,
advised the State of Bahia, through the Secretariat of Infrastructure (SEINFRA),
on modeling and structuring the project, which includes an innovation in
the traditional model of rehabilitation and maintenance (CREMA) contracts
being used in the country. This is the first time that short-term contracts
of roads rehabilitation and maintenance will be transformed into a Public-Private
According to the model being now adopted,
the private partner should seek a new financial engineering to support
a long-term project. Furthermore, the payments to the concessionaire will
be based on performance, considering criteria previously defined in a single
contract. This will result in the improvement in the quality of the rehabilitation
and maintenance services provided by the private partner as well as more
efficiency in the management of the contract. The increased tenor of the
contract, from five to 20 years, will also incur in efficiency gains for
the project. All these factors will generate benefits both to users and
to the management of the infrastructure by the government.
“Through this project, the State of Bahia
is paving new ways and helping create new quality and efficiency standards
for roads concessions in Brazil,” says Hector Gomez Ang, IFC Brazil
Country Head. “Innovation is critical to attract more resources and
medium-sized participants to infrastructure in Brazil. New, well-structured
models and projects will help establish more partnerships with the private
sector, which plays a key role in mobilizing the massive investments needed
for the infrastructure sector, especially considering the transition it
is currently going through”.
Estrada do Feijão Bahia will invest approximately
BRL 700 million throughout 20 years of concession. The project involves
the rehabilitation and maintenance of 462 kilometers of Estrada do Feijão
(BA-052), connecting the cities of Feira de Santana and Xique-Xique, and
85 kilometers of the road BA-160, in the stretch between Xique-Xique and
the ferry crossing point to the municipality of Barra; it also includes
the building of a new bridge over the São Francisco River that will connect
the municipalities of Barra and Xique-Xique. The new equipment will optimize
the travel time of pedestrians and passenger and commercial vehicles, in
addition to making the travel between the municipalities safer; that travel
is currently done by ferries. Inhabitants from 18 municipalities in Bahia
will benefit from the roadway improvements.
The structuring of the project counts with
the technical advisory of the International Finance Corporation (IFC),
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.
IFC—a sister organization of the World Bank
and member of the World Bank Group—is the largest global development institution
focused on the private sector in emerging markets. We work with more than
2,000 businesses worldwide, using our capital, expertise, and influence
to create markets and opportunities in the toughest areas of the world.
In FY17, we delivered a record $19.3 billion in long-term financing for
developing countries, leveraging the power of the private sector to help
end poverty and boost shared prosperity. For more information, visit www.ifc.org.
In October 2017, a partnership between IFC,
the National Bank for Economic and Social Development (BNDES), and the
Inter-American Development Bank (IDB) created the Private Participation
Promotion Program to support the implementation of infrastructure projects
in Brazil. The program aims to support the participation of the private
sector as a partner to governments in all levels (municipal, state, and
federal), helping them structuring concession projects and PPPs in several
sectors such as education, healthcare, roads, and airports.