VZCZCXRO0530
RR RUEHRG
DE RUEHBR #0016/01 0061427
ZNR UUUUU ZZH
R 061427Z JAN 09
FM AMEMBASSY BRASILIA
TO RUEHC/SECSTATE WASHDC 3244
INFO RUEHRI/AMCONSUL RIO DE JANEIRO 7070
RUEHSO/AMCONSUL SAO PAULO 3301
RUEHRG/AMCONSUL RECIFE 8886

UNCLAS SECTION 01 OF 02 BRASILIA 000016 
 
SIPDIS 
SENSITIVE 
 
STATE FOR WHA/BSC, WHA/EPSC, EEB/TRA 
 
E.O. 12958: N/A 
TAGS: EAIR EINV ECON BR
SUBJECT: Brazil Civil Aviation: Airport Privatization - the players 
and the timeline 
 
REF: A. BRASILIA 1621; B. SAO PAULO 0664; C. email between 
TCHRISTIANSEN and TROBL 12/17 
 
SENSITIVE BUT UNCLASSIFIED 
 
¶1.  (SBU) Summary:  Brazil is studying several concession models to 
raise capital for much needed airport infrastructure improvements 
before hosting the World Cup in 2014.  Private and public sector 
proposals have been received during the comment period phase, with 
most comments advocating private management of Brazil's commercial 
airports. The Technical Commission for the Coordination of Civil 
Aviation Activities (COTAER), which includes members of the Office 
of the President (OP), Ministry of Finance (MOF) the Ministry of 
Development, Industry and Foreign Commerce (MDIC), Ministry of 
Foreign Relations (MRE), Ministry of Tourism (MT), Ministry of 
Planning and Budget Management (MPOG), Board of Civil Aviation 
(CONAC), the Brazilian National Aviation Authority (ANAC), 
Department of Air Traffic Control (DECEA), the Agency for Airport 
Infrastructure Management (INFRAERO), the Brazilian National 
Development Bank (BNDES), and the MOD Department of Investigation 
and Prevention of Aeronautical Accidents (CENIPA), will consider 
these recommendations in crafting a final version.  Defense Minister 
Nelson Jobim will forward the commission's recommendation to 
President Lula, who will make the final decision.  Changes that 
impact the federal budget would require congressional review. Timing 
for implementing the concession model remains unclear and could 
potentially extend beyond the current Brazilian administration. End 
Summary. 
 
 
 
Agencies and Ministries Involved in Concession Model Formation 
--------------------------------------------- - 
¶2.  (U) Fernando Soares, Director of the Department of Civil 
Aviation Policy (DEPAC) of the Secretary for Civil Aviation (SAC) at 
the Ministry of Defense (MOD), explained recently the procedures and 
players involved in the concession model developmental process and 
the likely completion dates.  Soares explained that DEPAC is acting 
as the collection and coordination point in the concession model 
recommendation process.  This process started in August 2008 with 
the formation of a DEPAC working group to study possible concession 
models.  DEPAC's draft models were then presented to COTAER in 
October 2008.  COTAER was responsible for reviewing the working 
group's findings and providing recommendations.  DEPAC then held a 
public hearing to gather input to be incorporated into the proposals 
cleared by COTAER.  Soares explained that the concession seminar and 
a recent public hearing on airport privatization legislation held on 
November 9 in Brasilia were part of this required public 
consultation process (reftel A).  Once completed, CONAC, whose 
membership mirrors COTAER's but at higher working levels and chaired 
by the MOD, will then revise the draft proposal based on public and 
COTAER input.  DEPAC plans to complete the final draft proposal and 
present it for Jobim's review in March, with the intention of 
presenting it to President Lula by his requested April 9th 
deadline. 
PRIVATE SECTOR FEEDBACK 
---------------------- 
 
¶3.  (U) The Brazilian Association of Infrastructure and Basic 
Industry (ABDIB), whose 160 member companies represent sectoral 
interests such as telecommunications, energy and aviation and whose 
members comprise approximately 15% of Brazil's GDP, formed an 
Airport Committee (AC) in October 2008 composed of 30 member 
companies to develop private sector recommendations for airport 
privatization.  ABDIB's interest is based both on private sector 
interest in infrastructure improvements that can support expanding 
trade interests and on developing private sector investment 
opportunities.  The ABDIB Airport Committee has also signed a 
technical cooperation agreement with the Brazilian Sports Ministry 
(MOE) and the Brazilian Football Federation (CBF) to address 
infrastructure challenges related to hosting the World Cup.  Dario 
Queiroz Galvao, ABDIB Vice President, notes that initial ABDIB 
studies indicate an urgent need to begin improvement projects and 
calls on the GOB to quickly implement a transparent business- 
friendly concession model which addresses the disparity in 
profitability among Brazilian airports.  ABDIB is promoting an 
individual airport concession model administered by the Brazilian 
National Developmental Bank (BNDES). 
¶4.  (SBU) Comment: Greater clarity has been added to the airport 
concession model developmental process.  Input from the private 
sector (reftel A) indicates preference for a model based on offering 
concessions for individual airports rather than "bundled" 
concessions of profitable and non-profitable airports.  However, 
given the conflicting agency opinions and objectives within the 
commission, it is unclear whether the proposed timeline will be met 
and whether airport privatization will begin before the end of the 
current Administration in 2010. END COMMENT 
 
BRASILIA 00000016  002 OF 002 
 
 
 
SOBEL