On Nov. 25 2016 the Brazilian Government has published new rules (“Medida Provisória 752/2016”) in order to make possible to remake bids on highways, railways and airports ongoing concessions even before the final term of the contracts. The measure may be applied for cases where the Government understands that the contract has  not been correctly performed or where the concessionaire does not demonstrates fully capacity to  perform the contract.

The new rules also foresee some  adjustments on the ongoing concessions that happen to not be prematurely terminated.

Among the main provisions, we highlight:

(i.) The termination of the ongoing contract must be made by an amicable agreement between the concessionaire and the government.

(ii.) If the concessionaire agrees with the premature termination of the contract, he will have no right to withdraw afterward and will be responsible for the administration of the concession until the end of the new bid, which shall be made on a 24 months deadline.

(iii.) The concessionaire that agrees with the premature termination of the contract as well as its shareholders with a minimum of 20 percent voting capital will be  prohibited to participate of the new infrastructure bids.

(iv.) Discussions in regard to economic and financial equilibrium of the contracts, compensation for the premature termination of the contact and breach of contract may be resolved by the use of arbitration.

(v.)  The highway and railway concessionaires may request a contract extension in order to reestablish the economic and financial equilibrium of the contracts, provided that a few requirements are met by the concessionaire, such as a minimum percentage of investments.

(vi.)           On new airports concessions the concessionaire that wins the bid may be requested to pay a compensation to the estate owned company that administrates the airport in order to compensate costs with the dismissal of public officials/employees.