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Brazil nabs USD9.1 billion total in airport privatization deals

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November 22
1:07 PM 2013

On Friday, The New York Times' The DealBook said the government of Brazil had privatized two of its airports. The privatization deals had raised a combined BRL20.8 billion or USD9.1 billion for the Brazilian government. The deals, The DealBook noted, was done amid the country's efforts to upgrade its infrastructure in preparation for the World Cup next year.

A private group that was led by Odebrecht, a Brazilian construction company and Changi Airport paid BRL19 billion or USD8.3 billion to acquire the rights as an operator of Galeão airport for 25 years. The Galeão airport is located in Rio de Janeiro. The Confins airport, a smaller one located in the midwestern state of Minas Gerais, would now be operated for 30 years by a consortium led by Swiss Flughafen Zurich and Brazilian highways operator CCR for BRL1.82 billion or USD795 million. Under the terms of both contracts, the groups had agreed to pour in billions into the airports to improve the facilities. The consortiums would be taking over the airports in March next year, just months shy from the World Cup in June. Passenger traffic was expected to increase astronomically, the report said. The airports combined composed 14% of all passenger air traffic in Brazil.

The money raised from the privatization deals would reportedly go towards the Brazilian government's balance sheet for the state to be able to reduce its budget deficit this year.

The amount fetched from the privatization deals were larger than the amount the government of Brazil had raised from selling exploration rights to its massive offshore field called Libra in October. Libra fetched BRL15 billion from a single bidder for Brazil then.

Brazilian President Dilma Rouseff expressed her approval over the results of the privatization deals. Brazilian Center for Infrastructure director and Federal University of Rio de Janeiro professor Adriano Pires, howeverm said that despite the massive offers, it was not as impressive as it should have been.

"But even with all these flaws, Brazil is definitely better off today than it was yesterday," Mr. Pires said.

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