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Infrastructure concessions and PPPs in Brazil: how private capital builds and runs public infrastructure

Last verified: 2026-10-27 · Status: Changing

Brazil delivers roads, ports, airports, sanitation and power through common concessions paid by user tariffs and public private partnerships (PPPs) in which the state also pays. PPPs must be worth at least R$10 million and last 5 to 35 years, run through a special purpose company, and may use arbitration seated in Brazil in Portuguese. Federal priority projects are qualified in the PPI program, and the REIDI regime suspends PIS and COFINS on equipment, materials and services for the works, with an equivalent IBS and CBS suspension from the tax reform.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.3346 per US dollar for 27 October 2026 (the rate was R$5.5007 on 26 October and R$5.0377 on 23 October, so conversions move with the market). Conversions are for orientation only; the rate on the day of each FX contract will differ.

Key facts

Minimum PPP contract value	10000000 BRLLei nº 11.079 art. 2 § 4 I, as of 2026-10-27 · in force
Minimum PPP term	5 yearsLei nº 11.079 art. 5 I, as of 2026-10-27 · in force
Maximum PPP term including extensions	35 yearsLei nº 11.079 art. 5 I, as of 2026-10-27 · in force
Union cap on PPP continuing expenses	1 % of net current revenueLei nº 11.079 art. 22, as of 2026-10-27 · in force
State and municipal PPP spending level above which federal guarantees stop	3 % of net current revenueLei nº 11.079 art. 28, as of 2026-10-27 · in force
Minimum public consultation period before a PPP tender	30 daysLei nº 11.079 art. 10 VI, as of 2026-10-27 · in force
Period to use REIDI suspensions	5 yearsLei nº 11.488 art. 5, as of 2026-10-27 · in force

The rule

1. Two contract families. A common concession of public services or works is paid by user tariffs alone. A PPP is a concession in two forms: sponsored (patrocinada), where the public partner pays a consideration on top of tariffs, and administrative (administrativa), where the administration is the direct or indirect user of the services, even if the contract includes works or supply of equipment.Lei nº 11.079 (PPP Law), Art. 2 caput and §§ 1 to 3, 2004-12-30 official text · verified 2026-10-27

2. PPP floors. A PPP cannot be signed for a contract value below R$10,000,000, for a service period under 5 years, or with the sole object of supplying labor, supplying and installing equipment, or building a public work. The contract term must be compatible with amortizing the investment, between 5 and 35 years including extensions, and must allocate risks including force majeure, acts of government and extraordinary economic events.
Cost to do it: Minimum contract value of R$10,000,000 (about US$1.87 million).
Example: A municipal street lighting PPP worth R$9,500,000 over its life is barred; at R$10,000,000 or more over 5 to 35 years it is allowed. / Floor about US$1.87 million; the R$9,500,000 project is about US$1.78 million.Lei nº 11.079, art. 2 § 4 I as worded by Lei nº 13.529 of 2017, Art. 2 § 4 items I to III; art. 5 items I and III, 2004-12-30 official text · verified 2026-10-27 · changed: Lei nº 13.529 of 2017 gave art. 2 § 4 I its current wording, with the R$10,000,000 minimum contract value.

3. Special purpose company and control. Before the PPP contract is signed, a special purpose company (SPE) must be set up to implement and manage the project; it may be a listed company. Transfer of control of the SPE needs express approval of the administration, and the administration may not hold the majority of its voting capital (except a state bank enforcing a defaulted loan). In any concession, transferring the concession or control of the concessionaire without the grantor's prior consent leads to forfeiture (caducidade); the new controller must show technical, financial, legal and tax capacity and commit to the contract.
Cost to do it: Incorporation of an SPE (see Entities) and a consent process with the grantor for any later change of control.Lei nº 11.079; Lei nº 8.987 (Concessions Law), Lei nº 11.079 art. 9 §§ 1, 2, 4 and 5; Lei nº 8.987 art. 27, 1995-02-13 official text · verified 2026-10-27

4. Step in for lenders. The concession contract may let financiers and guarantors without a direct corporate link take control or temporary administration of the concessionaire to restructure it and keep the service running; the grantor may then require only legal and tax regularity from them. Control here includes resolutory ownership of shares or quotas by the financiers.
Cost to do it: Negotiated in the financing documents; no statutory fee.Lei nº 8.987, art. 27-A included by Lei nº 13.097 of 2015, Art. 27-A caput and §§ 1 to 4, 1995-02-13 official text · verified 2026-10-27

5. Payment and guarantees by the state. The public partner may pay by bank order, assignment of non tax credits, grant of rights against the administration or over dominical public property, and may make capital contributions (aporte) for works and reversible assets; an aporte may be excluded from the IRPJ, CSLL, PIS and COFINS bases as the law provides. Payment obligations may be secured by earmarked revenues, special funds, insurance, guarantees from international organizations or financial institutions, or a guarantee fund or state company created for that purpose.Lei nº 11.079, Art. 6 caput and §§ 2 and 3; art. 8 items I to VI, 2004-12-30 official text · verified 2026-10-27

6. Fiscal caps on PPP spending. The Union may only sign PPPs while continuing expenses from all PPPs did not exceed 1 percent of net current revenue in the prior year and will not exceed 1 percent of projected net current revenue in each of the next 10 years. States, the Federal District and municipalities that exceed 5 percent lose federal guarantees and voluntary transfers.
Cost to do it: Not a cost to the investor, but a cap on the grantor's capacity to sign new PPPs; check it in the tender's fiscal studies.Lei nº 11.079, art. 28 as worded by Lei nº 12.766 of 2012, Arts. 22 and 28, 2004-12-30 official text · verified 2026-10-27

7. Tender process and disputes. A PPP is tendered by concorrência or competitive dialogue, after a technical study, budget impact estimates and a public consultation of at least 30 days ending at least 7 days before the tender notice, and, where needed, a preliminary environmental license or licensing guidelines. The tender notice may provide for private dispute resolution, including arbitration seated in Brazil and conducted in Portuguese under the Arbitration Law; common concessions may provide the same.Lei nº 11.079, art. 10 as worded by Lei nº 14.133 of 2021; Lei nº 8.987 art. 23-A, Lei nº 11.079 arts. 10 items I, VI and VII, and 11 item III; Lei nº 8.987 art. 23-A, 2021-04-01 official text · verified 2026-10-27

8. Federal priority pipeline. The Investment Partnerships Program (PPI) gathers federal infrastructure partnerships, state and municipal projects delegated or supported by the Union, privatizations and strategic engineering works. Projects qualified in the PPI are strategic and have national priority before all administrative and control bodies of the Union, states, Federal District and municipalities. Since 2026 the PPI may also qualify research, mining, processing and transformation projects for critical and strategic minerals and their infrastructure.
Cost to do it: No fee to be qualified; qualification is a government decision.Lei nº 13.334, art. 1 § 1 item V included by Lei nº 15.506 of 2026; art. 5 as worded by Lei nº 13.901 of 2019, Art. 1 § 1 items I to V; art. 5, 2016-09-13 official text · verified 2026-10-27 · changed: Lei nº 15.506 of 2026 added item V to art. 1 § 1, opening the PPI to critical and strategic mineral projects and their infrastructure.

9. REIDI tax suspension. A company with an approved project for infrastructure works in transport, ports, energy, sanitation or irrigation gets PIS and COFINS suspended on new machinery, equipment and construction materials bought or imported for the works and on services and equipment rentals for them; the suspension turns into a zero rate once the item is used in the works, and unused items trigger payment with interest and late fines. Purchases qualify for 5 years from project approval. Simples Nacional companies are excluded.
Cost to do it: Habilitação with the Federal Revenue after project approval by the sector ministry; no fee in the law.Lei nº 11.488, Arts. 1 to 5, 2007-06-15 official text · verified 2026-10-27

10. REIDI in the new consumption taxes. Under the tax reform, imports and domestic purchases of new machinery, equipment and construction materials, and services and equipment rentals for infrastructure works, made directly by REIDI beneficiaries, are made with IBS and CBS suspended; the suspension becomes a zero rate once the item is incorporated, and benefits may be used for 5 years from the company's habilitação. Since 2026 the same benefits also apply to beneficiaries of the low carbon hydrogen regime (Rehidro).
Cost to do it: Same habilitação; the benefit is the cash flow of IBS and CBS not charged on capex.Lei Complementar nº 214, art. 106 § 7 included by Lei Complementar nº 227 of 2026, Art. 106 caput and §§ 1, 2, 3, 5, 6 and 7, 2025-01-16 official text · verified 2026-10-27 · changed: Lei Complementar nº 227 of 2026 added § 7 extending the REIDI IBS and CBS suspension to Rehidro beneficiaries.

Feature	Common concession	Sponsored PPP	Administrative PPP
Who pays	Users, through tariffs	Users plus public consideration	The administration
Statute	Lei nº 8.987	Lei nº 11.079 and Lei nº 8.987	Lei nº 11.079
Minimum value and term	None in the law	R$10,000,000; 5 to 35 years	R$10,000,000; 5 to 35 years
SPE required	If the tender requires it	Yes, before signing (art. 9)	Yes, before signing (art. 9)
Arbitration	Allowed, in Brazil and in Portuguese (art. 23-A)	Allowed, in Brazil and in Portuguese (art. 11 III)	Allowed, in Brazil and in Portuguese (art. 11 III)

Common concession, sponsored PPP and administrative PPP compared

Worked example

A foreign infrastructure fund bids for a state sanitation PPP: R$1,000,000,000 of capex (about US$187.5 million) over a 30 year term. It sets up a Brazilian SPE before signing (Lei nº 11.079 art. 9), negotiates lender step in rights (Lei nº 8.987 art. 27-A) and checks that the state's PPP spending stays under 5 percent of net current revenue so federal guarantees remain available (art. 28). The SPE applies for REIDI after project approval, so equipment and construction materials bought for the works in the first five years come without PIS and COFINS and, from the tax reform, without IBS and CBS (Lei nº 11.488 arts. 3 to 5; LC nº 214 art. 106). Disputes under the contract go to arbitration seated in Brazil, in Portuguese (art. 11 III).
Projects tendered under the federal PPI pipeline carry national priority status before licensing and control bodies (Lei nº 13.334 art. 5), which in practice is a signal to track the PPI project list when building an origination pipeline.

Step by step

1. Track the pipeline: federal PPI projects, state and municipal PPP units, and public consultations (at least 30 days before each PPP tender notice).
2. Read the tender package: risk matrix, payment and guarantee mechanism (earmarked revenue, guarantee fund, insurer or bank), and the grantor's fiscal headroom.
3. Form the bidding consortium and, after the award, incorporate the SPE before signing.
4. Apply for REIDI once the sector ministry approves the infrastructure project, and plan purchases within the 5 year window.
5. Arrange financing with step in rights and direct agreements with the grantor; infrastructure debentures may fit the funding mix (see Capital markets and finance).
6. Before any future sale, budget time for the grantor's prior consent to the change of control.

Common traps

Selling or restructuring the SPE without the grantor's consent. It can lead to forfeiture of the concession (Lei nº 8.987 art. 27; Lei nº 11.079 art. 9 § 1).
Using REIDI items elsewhere. Items not incorporated into the works lose the suspension, with tax, interest and late fines from the purchase date (Lei nº 11.488 art. 3 § 3; LC nº 214 art. 106 § 3).
Missing the REIDI window. Purchases after the 5 year period do not qualify.
Assuming arbitration can be seated abroad. PPP and concession laws require arbitration in Brazil and in Portuguese.
Underestimating the grantor's fiscal constraint. Subnational entities above the 5 percent PPP spending level lose federal guarantees and transfers, which weakens the payment security package.

Sources

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