The public concession is a contract signed between the Government and a private company that will receive the right to explore a certain service or infrastructure, for a fixed period, under agreed conditions. The provision of services must respect quality standards, established rates and premises of efficiency.
The concessionaire acts at his own risk, investing his own resources in the management, operation and maintenance of the service. To remunerate, explores rates paid by users and, in some cases, ancillary revenues associated with the service.
How the concession process occurs
The public concession obeys a rigorous formal and legal rite. Before granting the service, the Public Administration performs:
- Feasibility Studies: Evaluate if the concession is advantageous for society.
- Consultations and Public Hearings: allow the debate and improvement of the project.
- Bidding: Occurs under the competition regime, according to Law No. 8.987/95, ensuring equality among the interested parties.
After the bidding, the winner signs the concession agreement, which includes the conditions of rendering of services, the rates, the term of the contract and the penalties in case of non -compliance.
Procedure of manifestation of interest (PMI)
A common stage before bidding is the Procedure of Manifestation of Interest (PMI), in which the Government authorizes companies to develop technical studies that can then be used in the concession notice. If approved, these studies can be reimbursed later.
Public concession models
Common concession
It is the one in which the dealer's remuneration comes almost exclusively on the user's paid fare. Classic examples include tolls on highways and ticketing on public transport networks.
Public-Private Partnership (PPP)
When the collection with tariffs does not cover the operating costs, the Government complements the concessionaire's remuneration. In this type, there are two modalities:
- Sponsored concession: There is a partial charging of user fare, but also complementary public payments.
- Administrative Concession: The remuneration comes exclusively from the public coffers, without direct charges of users' fare.
Advantages of public concession
The concession model brings a number of benefits to the public administration and the population:
- Attraction of private investments: relieves the need for public contributions in infrastructure.
- Management Efficiency: The private sector brings innovation and seeks quality results.
- Regulatory Focus: Allows the state to act mainly as a regulator and supervisory.
Examples
Cases such as the concessions of Guarulhos (SP) and Galeão (RJ) airports and the duplication of highways such as Fernão Dias (BR-381) are some examples of services.
Disadvantages of the public concession
Despite its advantages, the model has risks that need to be managed:
- Possibility of conflict between profit and public interest: Revenue maximization can affect the quality and accessibility of services.
- Continuous Supervision: Government needs to maintain its technical monitoring capacity.
- High tariffs: Without proper regulation, users charged to users can become prohibitive.
Public concession x privatization
Although sometimes confused, concession and privatization are different processes. In the concession, the asset (public good) continues to belong to the State, while, in privatization, the definitive transfer of property to the private sector occurs.
Therefore:
| Item | Public concession | Privatization |
|---|---|---|
| Property | Remains public | Becomes private |
| Duration | Deadline | Ultimate |
| Example | Highway Concession | State selling (eg Embraer, Vale) |
| Economic characteristic | Services paid via tariff and/or counterclasses | Sale at market price |
Role of regulatory agencies in concessions
Regulatory agencies are responsible for overseeing and ensuring that the contractual conditions of the concessions are met. They monitor performance indicators, control tariff adjustments and are the formal channel for conflict mediation between users, dealers and the state.
Examples of regulatory agencies: ANTT (highways and railways), ANEL (electricity), ANATEL (telecommunications) and ANA (water and sanitation).
Having an independent technical agency is essential to balance public and private interests, giving legal certainty to the concession model.
What is well structured public concession
A well -structured public concession is one that clearly defines performance goals, fair fares, periodic revisions, supervision rules and penalties in case of bad service.
In addition, mechanisms of social control and transparency are essential to protect the public interest.
Having robust contracts and continuous performance evaluation mechanisms ensures that the legislator and the public manager can, in fact, provide better services for society.
Economic-Financial Balance Clauses
Every concession agreement must provide mechanisms that guarantee the economic and financial balance of the relationship between the granting power and the concessionaire. This means that if any events that significantly change the operating costs or expected revenue such as legislative changes, currency rebalancing, pandemics or changes in demand parameters, the contract must be adjusted to maintain the conditions originally agreed.
These clauses offer legal certainty for both parties, encourage private sector participation and reduce the risk of disputes or interruptions in the service. The rebalancing can be done by tariff review, extension of the contractual term or financial compensation, always based on technical criteria and transparency.
Public concessions as transformation tools
Public concessions , when well structured, represent an intelligent alternative to expand the country's infrastructure and improve services to the population. More than a financing model, they require strict planning, transparency, technical capacity and social control.
