Consortia pay $9bn for Brazil airport rights

irport operators from Singapore, Germany, Switzerland and Brazil on Friday won rights to run airports in Rio and Belo Horizonte, two host cities of the 2014 World Cup. One consortium including engineering firm Odebrecht and Singapore airport operator Changi paid 19 billion reais ($8.24 billion) for a 25-year concession to run Rio's Galeao airport at an auction held at the Sao Paulo stock exchange. A second consortium including Brazil's biggest highway operator CCR in partnership with Germany's Flughafen Munchen, operator of Munich airport, and Switzerland's Flughafen Zurich paid 1.8 billion reais ($780 million) for a 30-year concession for Belo Horizonte`s Confins airport. Minimum bids for the auction organized by the National Civil Aviation Agency was 4.8 billion reais ($2.1 billion) for Galeao airport, the country's second busiest, and 1.09 billion reais ($490 million) for Belo Horizonte's Confins airport. It was Brazil's third round of airport privatization. The first occurred in 2011 with the privatization of Sao Goncalo do Amarante airport in Rio Grande do Norte. Last year, 20-year concessions valued at a total of $14 billion were granted to manage three airports: two in Sao Paulo and one in Brasilia, breaking the monopoly of Infraero, the federal agency that runs more than 70 airports. The auctions are part of the government's efforts to modernize the country's aging and congested airports in preparation for the tens of thousands of tourists expected for next year's World Cup and the 2016 Rio summer Olympics. Galeao, which currently handles 17.5 million passengers annually , is projected to receive 60 million at the end of the concession period in 2038. Confins, which handles 10.5 million passengers a year, is projected to have 43 million a year by 2043. The government said it anticipates total investments of 12.9 billion ($5.6 billion) during the 25-year concession for Galeao and of 5.1 billion reais ($2.4 billion) for the 30-year concession for Confins. Contracts for the two airports are to be signed next March. When she announced the auction for Rio and Belo Horizonte last December, President Dilma Rousseff insisted that any private entities taking part would have to include at least one international partner "with experience running an airport handling at least 35 million passengers a year." And the operator must have "at least a 25 percent stake" in the consortium. Infraero is to retain a 49 percent stake in both airports. Meanwhile, according to a recent Infraero survey, construction delays are plaguing work at seven of the 12 Brazilian cities that will host the World Cup from next June. The worst delay was reported to be in the southern city of Porto Alegre, where work on expanding terminal at a cost of $69 million has not even begun. Work on the two terminals at Rio's Galeao is supposed to be completed by next April but is running behind schedule, according to the Infraero survey cited by the daily O Globo. In the southern city of Curitiba, only 6.19 percent of the airport upgrade has been completed. In the northeastern city of Salvador, capital of Bahia state, the percentage completed reached 20.2 percent and in Cuiaba, capital of the central state of Mato Grosso, 23.09 percent. A similar situation is reported at the airports of the northeastern city of Fortaleza and the southern city of Belo Horizonte. Things are smoother at privatized airports not run by Infraero, including Sao Paulo's Guarulhos airport, where 60 percent of the work has been completed. In Brasilia and Natal work on the airports are at least half completed.