The state of Pernambuco, Brazil, has finally canceled the public private partnership (PPP) contract involving the Multipurpose Arena Cup located in the Metropolitan Region of Recife.

As we informed in early May the Government had already announced plans to cancel two public private partnership (PPP) contracts: the Integrated Center of socialization in Itaquitinga and the above-referred Multipurpose Arena. 

The PPP contract for the Multipurpose Arena Cup was signed in June 2010 by Odebrecht Participações e Investimentos S.A. and Odebrecht Properties Entretenimento S.A. 

Since the beginning of 2015 it was formed a working group composed of government officials to analyze some issues related to the concession. The group focused on the following topics

• Financial projections of the project; 
• Actions to increase the gross revenue of the concession to reduce public transfers;
• Fulfillment of contractual obligations by the concessionaire;
• Implementation and execution of real estate project linked to the contract.

Additionally, an external consultant was hired to assist the state in the analysis of economic and financial situation of the PPP project.

According to the state, the concessionaire was not successful in the development, operation and maintenance of the project. The concessionaire will be entitled to compensation due to early termination of the contract, but the exact amount is not defined. 

The consensual termination of the PPP contract for the arena was formalized on July 7. The Empresa de Turismo de Pernambuco Governador Eduardo Campos (Empetur) will take over the maintenance, operation, maintenance, provisional operation and maintenance of the arena.