In the 1990s Brazil enacted comprehensive concession and public procurement laws governing the participation of the private sector in areas until then restricted to the public sector. Privatisations were effected through the sale of assets by state-owned enterprises to the private sector, through the granting of concessions for the use of existing facilities or authorisations for greenfield projects. Privatizations were carried out in infrastructure industries such as electricity, telecommunications and transport. In all those cases the revenues generated by the operation of the facility were expected to be sufficient to service debt, operate and maintain the facility and provide an adequate rate of return to the sponsors.

Now Brazil faces the challenge of attracting private investment in infrastructure that is essential to sustain its development, both in profitable infrastructure facilities such as electricity, transport (roads, airports, underground railways and seaports), and in areas which require payments by the government to repay the sponsors, such as roads which have not enough demand, hospitals, water and sanitation, irrigation, schools and prisons.

The major drawback to attracting investments into infrastructure still remains the political risks, mainly uncertainty as to whether the Brazilian Government will honour its financial obligations. Brazil’s advantages seem to be outweighing the political risk drawback. Brazil has in its favour the growth of its market,1 a strong economy and macroeconomic and government stability. While global foreign investment flows are projected to decline in 2008 and 2009, the developing countries are likely to be less affected by the current financial crisis. Brazil became the leading recipient of foreign direct investments in Latin America in 2007, followed by Mexico and Chile.2 This opens windows of opportunity for the construction

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