Santos-Guarujá tunnel auction draws interest from three infrastructure groups

Following recent political tensions, both the federal government and the state of São Paulo have reaffirmed that the Santos-Guarujá tunnel auction will proceed as scheduled next Friday (August 5). The contract entails the construction of the project, with investments totaling R$6.8 billion, in addition to an estimated R$1.78 billion in operating expenses over the 30-year Public-Private Partnership (PPP) period.

According to sources, there are currently three main contenders: Portuguese construction company Mota Engil, which counts the Chinese CCCC as a shareholder; a consortium formed by Odebrecht and EGTC Infra (Queiroz Galvão); and Spain’s Acciona.

Construction firm Marquise has also stated its intention to bid. However, sources close to the matter say that Italian company WeBuild, which had partnered with Marquise to form a bidding consortium, has backed out. Marquise could still partner with one of the remaining bidders.

If the current schedule is maintained, proposals must be submitted by next Monday (August 2).

However, market sources indicate that some uncertainties remain, both regarding the agreement between the federal and state governments and the financial capabilities of some of the bidding groups.

Acciona’s participation remains uncertain. If the Spanish company enters the race, it is expected to submit a conservative bid. Meanwhile, Mota Engil and Odebrecht are expected to be more aggressive, though their financial capacity is less clear, according to market observers.

Sources indicate that Odebrecht has been seeking a partner to bolster its consortium’s financial position and access to credit for several months, with no success so far.

One source said Odebrecht is considering various arrangements through Nova Infra, a vehicle it created to compete in concessions. A partnership could even be finalized after the auction if the group wins — a possibility some market players view with skepticism. The same source added that uncertainty over the federal-state partnership had complicated decision-making, which could even prevent Odebrecht from submitting a bid.

Another industry figure pointed out that, beyond the political noise, which has raised doubts over public contributions, the project’s expected return rate is below current interest levels. Although financing costs are expected to decline over the next two years, the project’s size and complexity introduce significant uncertainty regarding the rate of return.

According to Ports and Airports Minister Silvio Costa Filho, the government anticipates a successful auction. “We are very confident; we’ve received signals from the market that several groups plan to participate. We see strong interest from the private sector,” he said.

Rafael Benini, São Paulo’s Secretary for Investment Partnerships and the person who led the project’s structuring, confirmed that three groups have been actively engaged, based on their inquiries during the public bidding process.

Odebrecht, Queiroz Galvão, and Marquise declined to comment. Mota Engil and WeBuild did not respond. Acciona said in a statement that it is “constantly evaluating infrastructure opportunities that align with its business strategy.”

The project — first conceived about 100 years ago and repeatedly delayed — is now being jointly managed by the federal and state governments of São Paulo.

Since public funding will be the primary driver of the tunnel’s construction, the plan calls for an initial contribution of up to R$5.14 billion — half from the federal government and half from the state. In addition, the São Paulo government will make annual payments of up to R$439 million once the tunnel begins operations.

These public contributions could be reduced depending on the level of competition in the auction. The winner will be the bidder that offers the highest discount on the annual payments. If a group offers a 100% discount on these payments, it can then bid for a discount on the initial construction contribution as well.

One of the biggest obstacles in the bidding process has been the relationship between President Lula’s federal government and São Paulo Governor Tarcísio de Freitas (Republicanos).

The São Paulo state government failed to secure financing from the BNDES (National Development Bank) for its share of the investment, but has assured it can meet its financial obligations regardless.

On the federal side, the funds will come from the cash reserves of the Santos Port Authority (APS), Minister Costa Filho said.

In recent weeks, a ruling by Brazil’s Federal Court of Accounts (TCU) cited “potential weaknesses” in the project, including governance between the federal and state governments. However, the report did not call for a delay in the auction. Following a meeting on Wednesday (July 27), the parties involved confirmed the auction schedule and proposal submission date.

“Everything is aligned between the TCU, federal and state governments, and the APS. We held a final meeting to ensure everything is ready for the auction on August 5,” Costa Filho told Valor Econômico.

According to him, President Lula has not yet confirmed attendance, but either he or Vice President Geraldo Alckmin will attend the auction.

Asked about São Paulo’s funding shortfall, BNDES said in a statement that “the agreement was for the project to be funded equally” by both levels of government. The bank noted that the federal government “has secured half of the required resources,” while “the state government has yet to provide its portion. Given this, BNDES awaits guidance from the federal government.”

Another challenge, according to analysts, is project execution — particularly because the immersed-tube tunnel method has never been used in Brazil. Benini, however, expressed confidence. “The world’s first immersed tunnel was built a century ago. All the bidders have partnered with companies that have built even larger tunnels,” he said, noting that one of the more complex aspects will be temporarily halting operations at the Port of Santos to enable construction.

Benini said the tunnel will deliver major benefits to the region’s urban mobility, which currently relies on ferries. “It will be very important for both tourism and economic development. We’ve projected traffic volumes, but cultural changes will likely boost usage even further,” he said.

Costa Filho emphasized that the project — one of the flagship initiatives of Brazil’s Growth Acceleration Program (PAC) — will improve access to the port and reduce the 45-minute travel time between Santos and Guarujá.

Source: Valor Econômico

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