Government considers terminating contract with Arena PE.

Pernambuco 247 - The Pernambuco State Government is considering the possibility of breaking the contract signed with Odebrecht to manage the Arena Pernambuco. "It is possible to undo the contract, compensating the construction company," said Vice-Governor Raul Henry (PMDB) in an interview with Rádio Jornal this Thursday (2). "We have a world-class Arena in a country that does not have world-class income. Because the Arenas in Europe are viable," he added. Under the Public-Private Partnership (PPP) contract, Odebrecht has the right to manage the stadium for a period of 30 years.

Henry, who is responsible for monitoring PPPs in the state, says the government is concerned about the cost of the arena on the state treasury. According to the contract, the state must supplement the necessary costs to meet annual operating revenue to cover construction expenses and investments in the facility whenever necessary. For 2015, this year the amount is approximately R$ 100 million, and the state assumes about 70% of the risk for this amount. As profitability has been low – last year revenue was only R$ 25 million – the state treasury has been covering the recorded deficit.

Due to the expense, the Government of Pernambuco is hiring a consultancy to reassess the costs and try to find a way to improve the financial performance of the facility. "They [the consultancy] will study the current contract with the Arena and see how we can reduce costs and increase revenue. And see what is the best course of action for the State regarding this contract. Including the possibility of termination if that is the cheapest option for the Pernambuco treasury," Henry said in an interview with Blog do Jamildo.