A new era in the infra-structure investment field is about to come in Brazil. Some Brazilian States, such as São Paulo and Minas Gerais, have already enacted laws establishing the Public-Private Partnerships (“PPP”) agreements in order to make feasible project finance through legal relationships with the participation of the Public Administration and private entities.
Federal bill No.2546/2003 is still to be enacted by the Brazilian National Congress, to regulate PPP agreements at a federal level as well. It should be highlighted that the Brazilian PPP format assures the return of the investments. It is possible that the aforementioned Federal is not enacted before municipal elections in October because currently, the Brazilian National Congress is involved with other two very important bills – the Biodiversity Law and the Bankruptcy Law. However, infra-structure investments are now paramount for the sustainability of the Brazilian growth rate and many projects are already been structured at State levels or being considered for execution as soon as the Federal law is passed.
Another advantage of the PPP program relies on tax incentives, as it was already approved in the city of Recife, which gives an exemption up to 80 per cent in the Services Tax (ISS) for highway infra-structure projects, under the local PPP Law.
Among the Public Administration priorities for projects based on PPP, there are the enlargement of highways, the extension of a railway North-South, the construction of new underground lines, the exploitation of a high-speed train and the construction of an automated centre for document issuance.