Law 8,987, of February 13, 1995.

THE PRESIDENT OF THE REPUBLIC, I hereby make known that the National Congress decrees and I sanction the following Law:

Chapter I On Preliminary Provisions

Art. 1º

Concessions of public services and of public works, and permissions of public services, shall be governed by the terms of art. 175 of the Federal Constitution, by this Law, by the pertinent legal rules and by the clauses of the indispensable contracts.

Sole paragraph. The Federal Union, the States, the Federal District and the Municipalities shall promote the revision and necessary adjustments of their legislation to the prescriptions of this Law, seeking to address the peculiarities of the various modalities of their services.

Art. 2º

For the purposes of this Law, the following are considered:

1. granting authority: the Federal Union, the State, the Federal District or the Municipality, in whose competence lies the public service, preceded or not by the execution of public works, that is the object of concession or permission;
2. public service concession: the delegation of its provision, by the granting authority, by means of bidding in the open-bid or competitive dialogue modality, to a legal entity or consortium of companies that demonstrates capacity to perform it, at their own risk and for a determined term; (Wording given by Law 14,133, of 2021)
3. public service concession preceded by the execution of public works: the construction, in whole or in part, conservation, reform, expansion or improvement of any works of public interest, delegated by the granting authority, by means of bidding in the open-bid or competitive dialogue modality, to a legal entity or consortium of companies that demonstrates capacity to perform it, at their own risk, so that the concessionaire's investment is remunerated and amortized through the exploitation of the service or the works for a determined term; (Wording given by Law 14,133, of 2021)
4. public service permission: the delegation, on a precarious basis, by means of bidding, of the provision of public services, by the granting authority to the individual or legal entity that demonstrates capacity to perform it, at their own risk.

Art. 3º

Concessions and permissions shall be subject to oversight by the granting authority responsible for the delegation, with the cooperation of the users.

Art. 4º

The concession of public service, preceded or not by the execution of public works, shall be formalized by contract, which shall observe the terms of this Law, of the pertinent rules and of the bid notice.

Art. 5º

The granting authority shall publish, prior to the bid notice, an act justifying the convenience of granting the concession or permission, characterizing its object, area and term.

Chapter II On Adequate Service

Art. 6º

Every concession or permission presupposes the provision of service adequate to the full satisfaction of users, as established in this Law, in the pertinent rules and in the respective contract.

§ 1º Adequate service is that which satisfies the conditions of regularity, continuity, efficiency, safety, currency, generality, courtesy in its provision and moderation of tariffs.

§ 2º Currency comprises the modernity of the techniques, equipment and facilities and their conservation, as well as the improvement and expansion of the service.

§ 3º Interruption of the service shall not be characterized as discontinuity, in an emergency situation or after prior notice, when:

1. motivated by reasons of a technical nature or of safety of the facilities; and,
2. by the user's default, considering the collective interest.

§ 4º The interruption of the service in the hypothesis provided in item II of § 3º of this article may not begin on Friday, Saturday or Sunday, nor on a holiday or the day before a holiday. (Added by Law 14,015, of 2020)

Chapter III On the Rights and Obligations of Users

Art. 7º

Without prejudice to the provisions of Law 8,078, of September 11, 1990, the rights and obligations of users are:

1. to receive adequate service;
2. to receive from the granting authority and from the concessionaire information for the defense of individual or collective interests;
3. to obtain and use the service, with freedom of choice among several service providers, where applicable, observing the rules of the granting authority. (Wording given by Law 9,648, of 1998)
4. to bring to the knowledge of the public power and of the concessionaire the irregularities of which they are aware, regarding the service provided;
5. to communicate to the competent authorities the unlawful acts practiced by the concessionaire in the provision of the service;
6. to contribute to the permanence of the good condition of the public goods through which the services are provided to them.

Art. 7º-A (Added by Law 9,791, of 1999)

The concessionaires of public services, both under public and private law, in the States and the Federal District, are required to offer to consumers and users, within the month of maturity, a minimum of six optional dates to choose the days of maturity of their debts.

Sole paragraph. (VETOED) (Added by Law 9,791, of 1999)

Chapter IV On Tariff Policy

Art. 8º

(VETOED)

Art. 9º

The tariff of the granted public service shall be set by the price of the winning bid and preserved by the revision rules provided for in this Law, in the bid notice and in the contract.

§ 1º The tariff shall not be subordinated to prior specific legislation, and only in cases expressly provided for by law may its charging be conditional on the existence of an alternative and free public service for the user. (Wording given by Law 9,648, of 1998)

§ 2º The contracts may provide for tariff revision mechanisms in order to maintain the economic and financial balance.

§ 3º With the exception of taxes on income, the creation, modification or extinction of any taxes or legal charges, after the submission of the bid, when its impact is proven, shall imply the revision of the tariff, upward or downward, as the case may be.

§ 4º Should there be a unilateral amendment of the contract affecting its initial economic and financial balance, the granting authority shall reestablish it, concurrently with the amendment.

§ 5º The concessionaire shall publish on its website, in a clear and easily understandable manner for users, a table with the value of the tariffs charged and the history of the revisions or adjustments carried out in the last five years. (Added by Law 13,673, of 2018)

Art. 10

Whenever the conditions of the contract are met, its economic and financial balance is considered to be maintained.

Art. 11

In addressing the peculiarities of each public service, the granting authority may provide, in favor of the concessionaire, in the bid notice, the possibility of other sources from alternative, complementary, ancillary or associated-project revenues, with or without exclusivity, with a view to favoring the moderation of tariffs, observing the provisions of art. 17 of this Law.

Sole paragraph. The revenue sources provided in this article shall necessarily be taken into account in assessing the initial economic and financial balance of the contract.

Art. 12

(VETOED)

Art. 13

Tariffs may be differentiated based on the technical characteristics and specific costs arising from servicing different segments of users.

Chapter V On Bidding

Art. 14

Every concession of public service, preceded or not by the execution of public works, shall be the object of prior bidding, under the terms of the proper legislation and observing the principles of legality, morality, publicity, equality, judging by objective criteria and binding to the bid notice.

Art. 15 (Wording given by Law 9,648, of 1998)

In judging the bidding, one of the following criteria shall be considered:

1. the lowest value of the tariff of the public service to be provided;
2. the highest offer, in the cases of payment to the granting authority for the grant of the concession;
3. the combination, two by two, of the criteria referred to in items I, II and VII;
4. best technical proposal, with the price set in the bid notice;
5. best proposal based on the combination of the criteria of lowest tariff of the public service to be provided with the best technique;
6. best proposal based on the combination of the criteria of highest offer for the grant of the concession with the best technique; or
7. best offer of payment for the grant after qualification of technical proposals.

§ 1º The application of the criterion provided in item III shall only be permitted when previously established in the bid notice, including precise rules and formulas for economic and financial evaluation. (Wording given by Law 9,648, of 1998)

§ 2º For purposes of applying the provisions of items IV, V, VI and VII, the bid notice shall contain parameters and requirements for the formulation of technical proposals. (Wording given by Law 9,648, of 1998)

§ 3º The granting authority shall reject proposals that are manifestly unfeasible or financially incompatible with the objectives of the bidding. (Wording given by Law 9,648, of 1998)

§ 4º Under equal conditions, preference shall be given to the proposal submitted by a Brazilian company. (Wording given by Law 9,648, of 1998)

Art. 16

The grant of concession or permission shall not have an exclusivity character, except in the case of technical or economic unfeasibility justified in the act referred to in art. 5º of this Law.

Art. 17

A proposal that, in order to be viable, requires advantages or subsidies that are not previously authorized by law and available to all competitors shall be considered disqualified.

§ 1º A proposal from a state entity outside the political and administrative sphere of the granting authority that, in order to be viable, requires advantages or subsidies from the public power controlling such entity shall also be considered disqualified. (Renumbered from the sole paragraph by Law 9,648, of 1998)

§ 2º Any type of differentiated tax treatment, even as a consequence of the legal nature of the bidder, that compromises the fiscal equity that must prevail among all competitors is included in the advantages or subsidies referred to in this article. (Added by Law 9,648, of 1998)

Art. 18

The bid notice shall be prepared by the granting authority, observing, where applicable, the criteria and general rules of the specific legislation on biddings and contracts, and shall contain, in particular:

1. the object, goals and term of the concession;
2. the description of the conditions necessary for the adequate provision of the service;
3. the periods for receiving proposals, judging the bidding and signing the contract;
4. the period, place and time when the data, studies and projects necessary for the preparation of budgets and submission of proposals will be made available to interested parties;
5. the criteria and the list of documents required to verify technical capacity, financial soundness and legal and fiscal compliance;
6. the possible sources of alternative, complementary or ancillary revenues, as well as those from associated projects;
7. the rights and obligations of the granting authority and of the concessionaire regarding changes and expansions to be carried out in the future, to ensure the continuity of the service;
8. the criteria for adjustment and revision of the tariff;
9. the criteria, indicators, formulas and parameters to be used in the technical and economic-financial judgment of the proposal;
10. the indication of the revertible assets;
11. the characteristics of the revertible assets and the conditions under which these will be made available, in cases where the previous concession has been terminated;
12. the express indication of the party responsible for bearing the cost of expropriations necessary for the execution of the service or public works, or for the establishment of administrative easements;
13. the conditions of leadership of the responsible company, in the event that participation of companies in a consortium is permitted;
14. in cases of concession, the draft of the respective contract, which shall contain the essential clauses referred to in art. 23 of this Law, where applicable;
15. in cases of public service concession preceded by the execution of public works, the data relating to the works, including the basic project elements that allow their full characterization, as well as the guarantees required for that specific part of the contract, appropriate to each case and limited to the value of the works; (Wording given by Law 9,648, of 1998)
16. in cases of permission, the terms of the adhesion contract to be signed.

Art. 18-A (Added by Law 11,196, of 2005)

The bid notice may provide for the inversion of the order of the qualification and judging phases, in which case:

1. once the classification of proposals or the offering of bids has been concluded, the envelope with the qualification documents of the highest-ranked bidder shall be opened, to verify compliance with the conditions set forth in the bid notice;
2. once compliance with the requirements of the bid notice is verified, the bidder shall be declared the winner;
3. if the highest-ranked bidder is disqualified, the qualification documents of the bidder ranked second shall be analyzed, and so on, until a ranked bidder meets the conditions set forth in the bid notice;
4. once the final result of the bidding is proclaimed, the object shall be awarded to the winner under the technical and economic conditions it has offered.

Art. 19

When the participation of companies in a consortium is permitted in the bidding, the following rules shall be observed:

1. evidence of a public or private commitment to form a consortium, signed by the consortium members;
2. indication of the company responsible for the consortium;
3. submission of the documents required in items V and XIII of the previous article, by each consortium member;
4. impediment of consortium companies to participate in the same bidding, through more than one consortium or individually.

§ 1º The winning bidder is required to promote, before signing the contract, the constitution and registration of the consortium, under the terms of the commitment referred to in item I of this article.

§ 2º The leading company of the consortium is responsible before the granting authority for the performance of the concession contract, without prejudice to the joint and several liability of the other consortium members.

Art. 20

The granting authority is allowed, provided it is set forth in the bid notice, in the interest of the service to be granted, to require that the winning bidder, in the case of a consortium, be constituted as a company before signing the contract.

Art. 21

The studies, investigations, surveys, projects, works and expenses or investments already made, related to the concession, of use for the bidding, carried out by the granting authority or with its authorization, shall be made available to interested parties, with the winning bidder being required to reimburse the corresponding expenses, as specified in the bid notice.

Art. 22

Any person is guaranteed the right to obtain a certificate on acts, contracts, decisions or opinions relating to the bidding or to the concessions themselves.

Chapter VI On the Concession Contract

Art. 23

The following are essential clauses of the concession contract:

1. the object, area and term of the concession;
2. the manner, form and conditions of provision of the service;
3. the criteria, indicators, formulas and parameters defining the quality of the service;
4. the price of the service and the criteria and procedures for the adjustment and revision of the tariffs;
5. the rights, guarantees and obligations of the granting authority and of the concessionaire, including those related to the foreseeable needs for future amendment and expansion of the service and consequent modernization, improvement and expansion of the equipment and facilities;
6. the rights and duties of users for obtaining and using the service;
7. the form of oversight of the facilities, equipment, methods and practices of execution of the service, as well as the indication of the bodies competent to exercise it;
8. the contractual and administrative penalties to which the concessionaire is subject and the form of their application;
9. the cases of termination of the concession;
10. the revertible assets;
11. the criteria for calculating and the form of paying the indemnities due to the concessionaire, where applicable;
12. the conditions for extending the contract;
13. the obligation, form and frequency of accountability of the concessionaire to the granting authority;
14. the requirement to publish periodic financial statements of the concessionaire; and
15. the forum and the amicable means of solving contractual disputes.

Sole paragraph. Contracts relating to public service concessions preceded by the execution of public works shall additionally:

1. set the physical-financial schedules for the execution of the works linked to the concession; and
2. require a guarantee of faithful performance by the concessionaire of the obligations relating to the works linked to the concession.

Art. 23-A (Added by Law 11,196, of 2005)

The concession contract may provide for the use of private mechanisms for the resolution of disputes arising out of or related to the contract, including arbitration, to be conducted in Brazil and in the Portuguese language, pursuant to Law 9,307, of September 23, 1996.

Art. 24

(VETOED)

Art. 25

It is incumbent upon the concessionaire to execute the granted service, with responsibility for all damages caused to the granting authority, to users or to third parties, without the oversight exercised by the competent body excluding or attenuating that responsibility.

§ 1º Without prejudice to the responsibility referred to in this article, the concessionaire may contract with third parties for the development of inherent, ancillary or complementary activities to the granted service, as well as the implementation of associated projects.

§ 2º The contracts entered into between the concessionaire and the third parties referred to in the previous paragraph shall be governed by private law, with no legal relationship being established between the third parties and the granting authority.

§ 3º The execution of activities contracted with third parties presupposes compliance with the regulatory rules of the granted service modality.

Art. 26

Subconcession is permitted, under the terms provided in the concession contract, provided it is expressly authorized by the granting authority.

§ 1º The grant of subconcession shall always be preceded by an open bid.

§ 2º The subconcessionaire shall be subrogated to all rights and obligations of the subgrantor within the limits of the subconcession.

Art. 27

The transfer of the concession or of the corporate control of the concessionaire without the prior consent of the granting authority shall imply the lapse of the concession.

§ 1º For the purposes of obtaining the consent referred to in the caput of this article, the applicant shall: (Renumbered from the sole paragraph by Law 11,196, of 2005)

1. meet the requirements of technical capacity, financial soundness and legal and fiscal compliance necessary for the assumption of the service; and
2. undertake to comply with all clauses of the contract in force.

§ 2º (Repealed by Law 13,097, of 2015)

§ 3º (Repealed by Law 13,097, of 2015)

§ 4º (Repealed by Law 13,097, of 2015)

Art. 27-A (Added by Law 13,097, of 2015)

Under the conditions established in the concession contract, the granting authority shall authorize the assumption of control or temporary management of the concessionaire by its financiers and guarantors with whom it has no direct corporate relationship, to promote its financial restructuring and ensure the continuity of the provision of services.

§ 1º In the hypothesis provided in the caput, the granting authority shall require financiers and guarantors to meet the requirements of legal and fiscal compliance, and may modify or waive the other requirements provided in item I of the sole paragraph of art. 27.

§ 2º The assumption of control or temporary management authorized under the caput of this article shall not alter the obligations of the concessionaire and its controllers toward third parties, the granting authority and the users of the public services.

§ 3º Control of the concessionaire is configured, for the purposes set forth in the caput of this article, as resolvable ownership of shares or quotas by its financiers and guarantors who meet the requirements of art. 116 of Law 6,404, of December 15, 1976.

§ 4º Temporary management of the concessionaire by its financiers and guarantors is configured when, without transfer of ownership of shares or quotas, the following powers are granted:

1. to appoint the members of the Board of Directors, to be elected in General Meeting by the shareholders, in companies governed by Law 6,404, of December 15, 1976; or managers, to be elected by the quota-holders, in other companies;
2. to appoint the members of the Fiscal Council, to be elected by the controlling shareholders or quota-holders in General Meeting;
3. to exercise veto power over any proposal submitted to a vote of the shareholders or quota-holders of the concessionaire that represents, or may represent, harm to the purposes set forth in the caput of this article;
4. other powers necessary to achieve the purposes set forth in the caput of this article.

§ 5º The temporary management authorized under this article shall not impose liability on the financiers and guarantors with respect to taxation, charges, burdens, sanctions, obligations or commitments toward third parties, including toward the granting authority or employees.

§ 6º The Granting Authority shall regulate the term of the temporary management.

Art. 28

In financing contracts, the concessionaires may offer as guarantee the rights emerging from the concession, up to a limit that does not compromise the operability and continuity of the service provision.

Sole paragraph. In cases where the financing organization is a public financial institution, other guarantees shall be required from the concessionaire to make the financing viable. (Repealed by Law 9,074, of 1995)

Art. 28-A (Added by Law 11,196, of 2005)

To guarantee long-term loan contracts intended for investments related to concession contracts, in any of their modalities, the concessionaires may assign to the lender, on a fiduciary basis, a portion of their future operating credits, observing the following conditions:

1. the credit assignment contract shall be registered at the Title and Document Registry to be effective against third parties;
2. without prejudice to the provisions of item I of the caput of this article, the assignment of credit shall not be effective in relation to the granting Public Power except when the latter is formally notified;
3. the future credits assigned under the terms of this article shall be created under the ownership of the lender, regardless of any additional formality;
4. the lender may appoint a financial institution to collect and receive the payments of the assigned credits or allow the concessionaire to do so, as representative and depositary;
5. if a financial institution is appointed, as provided in item IV of the caput of this article, the concessionaire is required to present the credits to it for collection;
6. the payments of the assigned credits shall be deposited by the concessionaire or by the institution in charge of the collection into a checking account tied to the loan contract;
7. the depositary financial institution shall transfer the amounts received to the lender as the obligations of the loan contract become due; and
8. the assignment contract shall provide for the return to the concessionaire of any surplus resources, with retention of the balance after full performance of the contract being forbidden.

Sole paragraph. For the purposes of this article, long-term contracts are those whose obligations have an average maturity of more than 5 (five) years.

Chapter VII On the Duties of the Granting Authority

Art. 29

It is incumbent upon the granting authority to:

1. regulate the granted service and permanently oversee its provision;
2. apply the regulatory and contractual penalties;
3. intervene in the provision of the service, in the cases and conditions provided for in law;
4. terminate the concession, in the cases provided for in this Law and in the manner provided in the contract;
5. approve adjustments and carry out the revision of tariffs under this Law, the pertinent rules and the contract;
6. comply with and enforce the regulatory provisions of the service and the contractual clauses of the concession;
7. safeguard the good quality of the service, receive, investigate and resolve user complaints and claims, which shall be informed, within thirty days, of the measures taken;
8. declare to be of public utility the goods necessary for the execution of the service or public works, promoting expropriations, directly or by delegation of powers to the concessionaire, in which case the responsibility for the applicable indemnities shall lie with the latter;
9. declare to be of necessity or public utility, for the purposes of establishing administrative easements, the goods necessary for the execution of the service or public works, promoting it directly or by delegation of powers to the concessionaire, in which case the responsibility for the applicable indemnities shall lie with the latter;
10. encourage increased quality, productivity, environmental preservation and conservation;
11. encourage competitiveness; and
12. encourage the formation of user associations for the defense of interests related to the service.

Art. 30

In exercising oversight, the granting authority shall have access to data relating to the administration, accounting, technical, economic and financial resources of the concessionaire.

Sole paragraph. The oversight of the service shall be carried out through a technical body of the granting authority or by an entity in agreement with it, and, periodically, as provided in regulation, by a commission composed of representatives of the granting authority, of the concessionaire and of the users.

Chapter VIII On the Duties of the Concessionaire

Art. 31

It is incumbent upon the concessionaire to:

1. provide adequate service, in the manner provided in this Law, in the applicable technical rules and in the contract;
2. keep up to date the inventory and the registry of the assets tied to the concession;
3. render accounts of the management of the service to the granting authority and to users, under the terms defined in the contract;
4. comply with and enforce the rules of the service and the contractual clauses of the concession;
5. allow those in charge of oversight free access, at any time, to the works, equipment and facilities forming part of the service, as well as to its accounting records;
6. promote the expropriations and constitute the easements authorized by the granting authority, as provided in the bid notice and in the contract;
7. safeguard the integrity of the assets tied to the provision of the service, as well as adequately insure them; and
8. raise, apply and manage the financial resources necessary for the provision of the service.

Sole paragraph. Contracting, including of labor, by the concessionaire shall be governed by the provisions of private law and labor legislation, with no relationship being established between the third parties contracted by the concessionaire and the granting authority.

Chapter IX On Intervention

Art. 32

The granting authority may intervene in the concession, with the aim of ensuring the adequacy of the provision of the service, as well as the faithful compliance with the pertinent contractual, regulatory and legal rules.

Sole paragraph. The intervention shall be carried out by decree of the granting authority, which shall contain the appointment of the intervenor, the term of the intervention and the objectives and limits of the measure.

Art. 33

Once the intervention is declared, the granting authority shall, within thirty days, initiate administrative proceedings to verify the determining causes of the measure and to investigate liability, with the right of full defense assured.

§ 1º If it is proven that the intervention did not observe the legal and regulatory requirements, its nullity shall be declared, and the service shall be immediately returned to the concessionaire, without prejudice to its right to indemnity.

§ 2º The administrative proceedings referred to in the caput of this article shall be concluded within a period of up to one hundred and eighty days, on pain of the intervention being considered invalid.

Art. 34

Once the intervention has ceased, if the concession is not terminated, the management of the service shall be returned to the concessionaire, preceded by accountability from the intervenor, who shall be liable for the acts practiced during their management.

Chapter X On Termination of the Concession

Art. 35

The concession is terminated by:

1. expiration of the contractual term;
2. takeback (encampação);
3. lapse (caducidade);
4. termination for cause;
5. annulment; and
6. bankruptcy or extinction of the concessionaire company, and death or incapacity of the holder, in the case of a sole proprietorship.

§ 1º Once the concession is terminated, all revertible assets, rights and privileges transferred to the concessionaire shall return to the granting authority, as provided in the bid notice and established in the contract.

§ 2º Once the concession is terminated, the granting authority shall immediately take over the service, carrying out the necessary surveys, appraisals and liquidations.

§ 3º The takeover of the service authorizes the occupation of the facilities and the use, by the granting authority, of all revertible assets.

§ 4º In the cases provided in items I and II of this article, the granting authority, in anticipation of the termination of the concession, shall carry out the surveys and appraisals necessary to determine the amounts of indemnity that shall be due to the concessionaire, in the manner of arts. 36 and 37 of this Law.

Art. 36

The reversion at the expiration of the contractual term shall be made with the indemnity of the portions of the investments tied to revertible assets, not yet amortized or depreciated, that were made for the purpose of ensuring the continuity and currency of the granted service.

Art. 37

Takeback (encampação) is considered the retaking of the service by the granting authority during the term of the concession, on grounds of public interest, by means of a specific authorizing law and after prior payment of the indemnity, in the manner of the previous article.

Art. 38

Total or partial non-performance of the contract shall result, at the discretion of the granting authority, in the declaration of lapse of the concession or the application of the contractual sanctions, observing the provisions of this article, of art. 27, and the rules agreed between the parties.

§ 1º The lapse of the concession may be declared by the granting authority when:

1. the service is being provided in an inadequate or deficient manner, based on the rules, criteria, indicators and parameters defining the quality of the service;
2. the concessionaire fails to comply with contractual clauses or legal or regulatory provisions concerning the concession;
3. the concessionaire halts the service or contributes to that result, except for the hypotheses arising from chance or force majeure;
4. the concessionaire loses the economic, technical or operational conditions to maintain the adequate provision of the granted service;
5. the concessionaire fails to comply with the penalties imposed for infractions, within the appropriate deadlines;
6. the concessionaire fails to comply with the notice of the granting authority to regularize the provision of the service; and
7. the concessionaire fails to comply with the notice of the granting authority to, within 180 (one hundred and eighty) days, present the documentation relating to fiscal compliance, during the term of the concession, in the manner of art. 29 of Law 8,666, of June 21, 1993. (Wording given by Law 12,767, of 2012)

§ 2º The declaration of lapse of the concession shall be preceded by the verification of the default of the concessionaire in administrative proceedings, with the right of full defense assured.

§ 3º Administrative default proceedings shall not be initiated before the concessionaire is informed, in detail, of the contractual breaches referred to in § 1º of this article, giving it a period to correct the flaws and transgressions identified and to comply with the contractual terms.

§ 4º Once the administrative proceedings are initiated and the default is proven, the lapse shall be declared by decree of the granting authority, regardless of prior indemnity, calculated during the proceedings.

§ 5º The indemnity referred to in the previous paragraph shall be due in the manner of art. 36 of this Law and of the contract, less the value of contractual fines and damages caused by the concessionaire.

§ 6º Once the lapse is declared, no liability of any kind shall result for the granting authority in relation to the charges, burdens, obligations or commitments toward third parties or employees of the concessionaire.

Art. 39

The concession contract may be terminated at the initiative of the concessionaire, in case of non-compliance with the contractual rules by the granting authority, by means of a judicial action specifically filed for that purpose.

Sole paragraph. In the hypothesis provided in the caput of this article, the services provided by the concessionaire may not be interrupted or halted until the final and unappealable judicial decision.

Chapter XI On Permissions

Art. 40

The permission of public service shall be formalized by an adhesion contract, which shall observe the terms of this Law, of the other pertinent rules and of the bid notice, including as to the precarious nature and the unilateral revocability of the contract by the granting authority.

Sole paragraph. The provisions of this Law apply to permissions.

Chapter XII Final and Transitional Provisions

Art. 41

The provisions of this Law do not apply to the concession, permission and authorization for sound broadcasting and television services.

Art. 42

Public service concessions granted prior to the entry into force of this Law are considered valid for the term set in the contract or in the granting act, observing the provisions of art. 43 of this Law.

§ 1º Once the term mentioned in the contract or granting act has expired, the service may be provided by a body or entity of the granting authority, or delegated to third parties, by means of a new contract. (Wording given by Law 11,445, of 2007)

§ 2º Concessions on a precarious basis, those with an expired term and those in force for an indefinite term, including by virtue of prior legislation, shall remain valid for the period necessary for the carrying out of the surveys and appraisals indispensable for the organization of the biddings that will precede the granting of the concessions that will replace them, with that period not being less than 24 (twenty-four) months.

§ 3º The concessions referred to in § 2º of this article, including those that do not have a formalizing instrument or that have a clause providing for extension, shall have a maximum validity until December 31, 2010, provided that, by June 30, 2009, the following conditions are cumulatively met: (Added by Law 11,445, of 2007)

1. the broadest and most retroactive possible survey of the physical elements constituting the infrastructure of revertible assets and of the financial, accounting and commercial data relating to the provision of the services, in a dimension necessary and sufficient for the calculation of any indemnity relating to investments not yet amortized by the revenues arising from the concession, observing the legal and contractual provisions that governed the provision of the service or that applied to it in the 20 (twenty) years prior to the publication of this Law;
2. execution of an agreement between the granting authority and the concessionaire on the criteria and form of indemnity for any remaining credits of investments not yet amortized or depreciated, ascertained from the surveys referred to in item I of this paragraph and audited by a specialized institution chosen by mutual agreement of the parties; and
3. publication in the official press of a formal act of the granting authority authority, authorizing the precarious provision of the services for a period of up to 6 (six) months, renewable until December 31, 2008, upon proof of compliance with the provisions of items I and II of this paragraph.

§ 4º Should the agreement provided in item II of § 3º of this article not occur, the calculation of the investment indemnity shall be made based on the criteria provided in the previously executed concession instrument or, in its absence, by appraisal of its economic value or patrimonial revaluation, depreciation and amortization of fixed assets defined by tax legislation and corporation law, carried out by an independent audit firm chosen by mutual agreement of the parties. (Added by Law 11,445, of 2007)

§ 5º In the case of § 4º of this article, the payment of any indemnity shall be made, against a security interest, through 4 (four) equal and successive annual installments of the portion not yet amortized of investments and other indemnities related to the provision of the services, made with the concessionaire's own capital or that of its controller, or originating from financing operations, or obtained through the issuance of shares, debentures and other securities, with the first installment paid by the last business day of the fiscal year in which the reversion occurs. (Added by Law 11,445, of 2007)

§ 6º Should an agreement be reached, the indemnity referred to in § 5º of this article may be paid through revenues of the new contract that comes to govern the provision of the service. (Added by Law 11,445, of 2007)

Art. 43

All public service concessions granted without bidding under the 1988 Constitution are hereby terminated.

Sole paragraph. All concessions granted without bidding prior to the 1988 Constitution, whose works or services have not been initiated or that are halted upon the entry into force of this Law, are also hereby terminated.

Art. 44

Concessionaires that have works in arrears on the date of publication of this Law shall submit to the granting authority, within one hundred and eighty days, an effective plan for completing the works.

Sole paragraph. If the concessionaire does not submit the plan referred to in this article, or if such plan does not offer effective conditions for completing the works, the granting authority may declare the concession terminated with respect to those works.

Art. 45

In the hypotheses dealt with in arts. 43 and 44 of this Law, the granting authority shall indemnify the works and services carried out only in the case and with the resources of the new bidding.

Sole paragraph. The bidding referred to in the caput of this article shall necessarily take into account, for purposes of appraisal, the stage of the halted or delayed works, so as to allow the use of the judging criterion established in item III of art. 15 of this Law.

Art. 46

This Law enters into force on the date of its publication.

Art. 47

Provisions to the contrary are hereby repealed.

Brasília, February 13, 1995; 174th of Independence and 107th of the Republic.

FERNANDO HENRIQUE CARDOSO
Nelson Jobim

This text does not replace the one published in the Official Federal Gazette of February 14, 1995 and republished on September 28, 1998.