Over the past several months, the Special Secretary of the Investment Partnership Program (PPI) of the Brazilian Ministry of Economy (SEPPI), Martha Seillier, and a delegation including President Jair Bolsonaro, the Ministers of Economy, Infrastructure, Agriculture, Mines and Energy, and Tourism and senior representatives of BNDES (Brazil's development bank) and CNI (the primary organization representing Brazilian industry), mounted a roadshow for investors and for representatives of investment funds, sovereign wealth funds and international business, among other interested parties. At the roadshow, Special Secretary Martha Seillier presented SEPPI's broad and diversified portfolio, which includes investments totaling more than 607 billion reals or approximately USD110 million.

During the roadshow in New York, one of the main themes was the significance of auctions in improving the infrastructure sector in Brazil. The main topics included the relevance of auctions on: (i) the expanding pipeline of infrastructure projects in the country, among the largest in the world; (ii) the growing relevance of private players in key infrastructure investments to mitigate fiscal pressure on the government; and (iii) the significant improvements made in recent years to the regulatory framework in Brazil, which have enhanced sector transparency and best practices (including ESG principles) and increased the market's attractiveness to foreign investors by addressing concerns around contracting and other legal risks in Brazil, and by creating more diverse investment options, such as early concession renewals and the re-auctioning of assets.

The Ministry of Economy's PPI will be focused on four pillars: (i) economic infrastructure (e.g., highways, lighting, etc.); (ii) social infrastructure (e.g., publicprivate partnerships in education, urban security, etc.); (iii) privatization (e.g., Correios, Eletrobras, etc.); and (iv) real estate. Such a robust partnership program reflects the maturing of project development in the infrastructure sector, and how it has benefited from key advances in financial modeling, economic studies, risk analysis and structural improvements to the auction process, including changes to avoid opportunistic bids.

Special Secretary Seillier highlighted that the goals of the PPI are to serve as a “hub” for projects and to expand and strengthen the interaction between the State and the private sector through partnership contracts and other privatization measures, in the transport, logistics, energy, telecommunications and sanitation sectors, among others.

At the federal level, the Brazilian government has auctioned 119 assets since 2019 and still has another 180 projects to be auctioned over the coming years through the PPI. Key auctions held in 2021 covered the Nova Dutra highway project, Fiol (railway project), the sixth airport bidding round and the 5G telecom process, all of which were eagerly awaited by investors and had positive outcomes.

Increasing auction and investment activity and the strategic government priorities that were highlighted in the SEPPI roadshow are expected to keep opportunities expanding for foreign and domestic investment and project development in Brazil. The Willkie team will continue to monitor auction processes and investments in the region across a range of sectors, including energy and technology.

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Ms Juliana V. Pimentel
Willkie Farr & Gallagher LLP
787 7th Avenue
Washington
10019
UNITED STATES

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