MercoPress. South Atlantic News Agency

Brazil sets tough rules for three airport terminals concessions

Sao Paulo Guarulhos airport, Brazil’s busiest

Operators interested in running Brazil's largest airport will be required to make a minimum bid of 1.3 billion dollars, Brazil's aviation authority said on Thursday.

Brazil, which has seen double-digit annual growth in air traffic, is planning to expand and modernize its main airports ahead of the 2014 World Cup and 2016 Olympics in Rio de Janeiro.

Bidding for the rights to build and operate three airport terminals is tentatively scheduled for Dec. 22, although authorities say the date depends on rulings by government watchdogs.

Investors have been closely watching the bidding amid broader uncertainty over Brazil's investment climate. A heavy government hand in several industries has raised concern with some private investors.

Earlier this year the government said that Infraero, the state-owned company that currently runs most airports, will maintain veto right on strategic decisions in the joint-ventures it will form with winning bidders. Infraero will hold a 49% stake in these joint ventures.

The winning bidder for Guarulhos, Sao Paulo's main international airport, will be charged 10% of gross revenue over a 20-year contract. In addition to airport fees, the operator will earn 804 million Reais in revenues by 2032, compared with an estimated 373 million Reais in 2012, Secretary of Civil Aviation Wagner Bittencourt said.

The estimated return on investment for each of the projects is 6.46%, according to Bittencourt's office. Required investments at Guarulhos total 5.2 billion Reais.

Brazil will also auction off concessions at Viracopos airport, in Sao Paulo state, as well as at the airport in the capital, Brasilia.

Bidders for Viracopos, which requires investments of 9.9 billion Reais, will have to offer at least 521 million Reais and will pay 5% of gross revenues over a 30-year contract.