The volume of public–private partnership (PPP) contracts in the school infrastructure sector is expanding in Brazil, with at least 8.5 billion (bn) reais (US$1.6bn) in investments coming onto the radar and multiple projects being structured in various regions of the country.
This Tuesday, the state government of Paraná auctioned two PPP contracts for the construction and maintenance of public schools, with investments under the two contracts expected to total 1.7bn reais in works.
The auction was divided into two lots and was the target of intense competition, with the Brazilian company CS Infra winning both contracts.
Forty new schools will be built through PPP contracts, with one comprising 22 schools and the other 18.
“We already operate in highways, ports and urban mobility and today is an important step, as this is our first project in social infrastructure, with an impact on the state and on education. Well-structured projects like this have everything it takes to attract more private interest”, said Fernando Quintas, CEO of CS Infra, during the auction.
In the first lot, CS Infra defeated three other bids – from the Araucária Consortium, the JOPE ISB Consortium and the Aedifica Paraná Consortium – by offering a 17.12% discount on the consideration to be paid by the state government.
In lot two, CS Infra beat the Consórcio Araucária and the Consórcio JOPE ISB, with a discount offered of 17.49%.
The fierce competition seen in Tuesday’s auction highlights participants’ interest in an increasingly vibrant market in Brazil.
“Local governments have realized how efficient PPP contracts are for materializing investments in the education sector,” said Ivan Pereira, CEO of Mind Lab, a Brazilian company specialized in technological solutions and digital innovation that plans to participate in upcoming educational PPP auctions, to BNamericas.
According to Teixeira, in addition to the possibility that companies are positioned in a sector with significant social impacts, the guarantee model for educational PPP contracts, even those of local governments, is linked to the Fundo de Manutenção e Desenvolvimento da Educação Básica e de Valorização dos Profissionais da Educação (Fundeb – Fund for the Maintenance and Development of Basic Education and for the Appreciation of Education Professionals), which makes the contracts have a guarantee equivalent to sovereign risk.
Other Projects
The PPP pipeline focused on school infrastructure continues to gain traction in the country, and the initiatives range from the construction of new units to the modernization, operation, and maintenance of existing schools, with a focus on the provision of non‑pedagogical services – a model that has been used to accelerate investments in the sector.
The government of Minas Gerais plans to auction, on March 30, a PPP contract totaling 5.1bn reais in capex and opex for the renovation, conservation, and maintenance of 95 public schools, in addition to the possible construction of three new units.
The project should benefit around 70 thousand students in 34 municipalities in the north of the state and the metropolitan region of Belo Horizonte.
Meanwhile, the government of the state of São Paulo plans to hold, in the second half of this year, the auction of a PPP of 1.7bn reais for the maintenance of 143 schools. The contract was structured with
the support of the Inter-American Development Bank (IDB).
More Contracts
In addition to the contracts organized by state governments, the National Bank for Economic and Social Development (BNDES) has also been supporting local governments in structuring school PPPs in other locations.
BNamericas gathered details on these ongoing initiatives, which still do not have published investment estimates.
