On November 29, 2006, the government of the State of São Paulo executed the contract for Brazil´s first Public-Private Partnership (PPP), which sets the guidelines for the construction and operation of Line 4 of the São Paulo Metro for the next 30 years.
The formalisation of the agreement was only possible following the rejection by the São Paulo State Court of an appeal filed by the Metro workers´ Union, as the latter had alleged that workers of the new Line 4 would not be entitled to the same level of benefits as workers from the other operating lines have.
In disagreement with the assertion above, the Secretary of Transportation, Mr. Jurandir Fernandes, declared that the State of São Paulo will be able to save up to US$ 34 billion with the implementation of this PPP, and providing metro users with a higher quality service.
The bid was won by the MetroQuatro consortium, a group led by Latin America´s largest road concession operator, Companhia de Concessões Rodoviárias, along with Montgomery Participações SA, RATP Development SA, and Benito Roggio Transporte SA. The group agreed to invest the amount of US$ 340 million (approximately GBP 173 million) in lines, signalling, trains, and maintenance of Line 4. In exchange for said investment, the MetroQuatro shall be entitled to all revenue originating from tickets sales, advertising in trains and stations, and rent spaces destined to stores. In addition, it shall also receive from the government of the state of São Paulo the total amount of £ 18 million, payable in 48 monthly instalments.
The Federal government believes that the success of Brazil´s first PPP will encourage companies to bid in already finished projects, such as the renovation, maintenance, and capacity increase of Federal Highways BR116 and BR 324, the archway to link the Port of Sepetiba to main highways, and the São Paulo Belt Railway. Additionally, other state governments, such as Minas Gerais and Bahia, with several PPP projects in advanced stages, also hope to benefit from this court decision.
More good news was the announcement in December 2006 by the Inter-American Development Bank ("IDB) regarding the approval of a contribution of USD 1 million in favour of the creation of the Brazilian PPP Development Facility, whose purpose is to promote, inter alia, the development of PPP and concessions. This Facility is a joint initiative of the Brazilian National Development Bank, the World Bank´s International Financial Corporation and the IDB.