On November 19, 2019, a report for the bill on the General Concessions Law (GCL) was submitted to the House of Representatives, which will replace the text of the former bill no. 7.063 of 2017. On November 27, 2019, the new text was voted and approved by a lower house’s special committee.
In his report, Deputy Arnaldo Jardim stressed the dynamism which the infrastructure theme carries, requiring the adoption of more modern contractual and regulatory mechanisms by the public manager. In addition, the premises which served as the “backbone” of the GCL bill were highlighted, namely: a) a “living” concession contract, b) the attraction of the private investor, and c) legal certainty.
GCL brings several new features, including the broadening use of arbitration (which may now be used, for example, to solve issues related to economic-financial rebalancing as well as contract termination) and the possibility of using Dispute Boards in new concession agreements. Other than that, since the protagonist of this new model is the investor, it seeks to reduce the bureaucracy and contractual formalities, as to allow the award of more diverse contracts.
In addition, GCL authorizes the execution of contracts in foreign currency, as long as their scope is for use or service of infrastructure in the rail, waterway, port, airport and electric power sectors. Similarly, the use of debentures is encouraged by facilitating their access to the foreign private investors and, also, by extending the term for presenting expenses or debts that can be reimbursed by public-offering these debentures.
On the other hand, the approval of such new features was not general. The Ministry of Economy has criticized the text as well as its length, as the bill has 223 articles. Furthermore, the requirement for technical and operational qualification of companies wishing to participate in new concessions is questioned, given that it could mean a market reserve for national companies.
The bill, which has already been approved by a special committee of the House of Representatives, has yet to be voted by the lower house’s plenary and also by the Federal Senate. In view of the criticisms presented by the Government, the voting was held under the condition that considerations on the GCL are to be given by December 9, 2019.
Despite the need to revise the current legislation to reduce bureaucracy and streamline the concession sector in Brazil, it is salutary that there should be enough time for its proper evaluation and wide discussion among all actors involved. This is the only way to safely move towards a legal framework which encourages the needed and desired investments in concessions in Brazil.
