Public-Private Partnerships (PPP) and Concessions of Public Services in Brazil

Abstract

This paper examines the current regulation of public-private partnerships (PPP) and concessions of public services in Brazil. Under the Brazilian Constitution, the government must provide or build certain public utility services or infrastructure works directly, by using its own departments and personnel, or indirectly through a government franchise. Such franchise may take the form of concessions or PPPs (public-private partnerships). Both of these contractual arrangements involve initial commitments by the private party (concessionaire) to invest and expect repayment from the revenues of the concession. The difference between the two categories of franchises under Brazilian law is based on the form of government contribution. Brazilian PPPs are special types of concessions in which part or all of the concessionaire’s compensation is paid by the government and does not come directly from the revenue gained through the service or work at issue. They also provide that the government may undertake to fund directly the initial works to reduce the risk assumed by the private party. Both PPPs and the so-called common concessions are available and actually employed throughout all government levels in Brazil. Most of the Brazilian government activity in infrastructure areas in the past 20 years has adopted a concession or PPP format. By analyzing the main features of the Brazilian concession and PPP system against the backdrop of international systems, this paper aims to offer the international reader a comprehensive and comparative view of the legal framework behind most large-scale investments in Brazilian infrastructure.