Brazil’s President Michel Temer signed a temporary decree on Thursday laying the rules for private concessions to build and operate infrastructure, a key part of his plan to revive economic growth.
The measure, which has to be approved by Congress in 90 days, allows Temer’s government to immediately start granting and renewing concessions for roads, railways, ports and airports under rules modified to attract new investment in Latin America’s largest economy.
The decree, seen by Reuters, will be published in the official Federal Register on Friday.
Aging and underdeveloped infrastructure has held back exports from Brazil, one of the world’s main suppliers of iron ore, soybeans, sugar, coffee and meats.
The bill sketches out rules that will allow Temer’s government to strip concession contracts granted during the previous government from investors that have failed to meet the minimum terms of their contracts.
Many engineering companies that are currently involved in infrastructure projects have been entangled in Brazil’s biggest corruption scandal in history, known as Operation Car Wash, and have been pushed to the brink of bankruptcy. Some may not be able to meet the terms of their concessions or put up new investments.
The rules of the new decree also lay out how future infrastructure investors will be able to assume the debt of previous concession holders.
It lays out arbitration rules for disputes with concession holders and allows the government to renew concession terms early in exchange for new investments by operators that have completed the bulk of the construction work in the contract.
The framework legislation also defines how investors can negotiate the return of concession contracts that have turned out to be problematic for investors due to environmental or technical challenges in their execution.
The Temer government in recent weeks has launched sweeping plans to auction off licenses to operate oil and gas, electricity and infrastructure projects to try to boost investment and pull Brazil out of its deepest recession since the 1930s.