Brazil In Talks On Rio's Galeao Airport Concession
October 29 2009 - 1:45PM
Dow Jones News
Brazilian officials are in talks with the owners of the Paris
Charles de Gaulle International Airport and the owners of Frankfurt
Airport over a possible concession to run Rio de Janeiro's Galeao
International Airport, according to Rio de Janeiro Finance
Secretary Joaquim Levy.
"A privatization of the airport could bring in $3 billion to $4
billion," Levy said, speaking to a Brazilian investment conference
in New York via telephone.
Levy told Dow Jones Newswires at a conference in Miami last week
that Aeroports de Paris (ADP.FR), owner of Charles de Gaulle, had
shown interest, as well as Fraport AG (FRA.XE), owner of the
Frankfurt airport. Officials said these are just two of many
entities looking at Rio's airport, including parties within
Brazil.
A deal would be in the form of a concession, in which the
Brazilian government would grant ownership of the airport for
around 25 years, according to Cristian Prado, manager of
infrastructure and new investments at the Rio de Janeiro Federation
of Industries, or Firjan.
The concessions could then be extended for another 25 years, he
explained.
A spokesman for Fraport said Thursday the German airport
operator has a strong interest in the Brazilian market, but added
that it is up to the Brazilian government to create the necessary
conditions for privatization first.
"But we're looking at this process with great interest and we're
following developments closely," he said when contacted by Dow
Jones Newswires.
A spokesman from Aeroports de Paris declined to comment. The
company, however, has been branching out and taking stakes in other
airports around Europe.
A concession on the airport is part of a broader effort by the
Brazilian government to attract investment dollars from overseas to
help fund the massive overhaul of the city of Rio de Janiero in
time for the Olympic games in 2016. Brazil is also hosting the
World Soccer Cup in 2014. The cup's final game is scheduled for
Rio's famed Maracana Stadium.
Officials have been touring the U.S. as well as some European
and Asian countries to speak with prospective investors.
Prado said he has been in talks with entrepreneurs in Thailand,
India, Korea, Germany, Japan and China, among others.
Firjan estimates about $60 billion of investment into Rio is
needed for the next three years as the city remodels public
transportation lines to double capacity between some busy hubs and
to build new hotels. Construction of new port facilities and a
remodeling of the airport is also included in these infrastructure
investment plans.
These are still early estimates and Brazilian officials say they
can't provide numbers for how much money will actually be flooding
into the region from all the different projects. More than 100
projects have already been announced and total investments into the
city should increase, Firjan says, now that Rio has won the bid to
host the Olympics.
Levy said last week the government expects about 30% of total
investment to come from the private sector.
The spotlight on Rio has also put the city's high crime rate
into focus and many in the investment community have raised
concerns over security.
In response to those concerns, Levy said Thursday that the
government is putting $2 billion toward increasing security and
social services in some of the poorer parts of the city, known
locally as favelas.
-Kejal Vyas, Dow Jones Newswires; 212-416-2185;
kejal.vyas@dowjones.com
(Kirsten Bienk in Hamburg contributed to this report.)