Portugal's government says it is granting Spain's Grupo Avanza the concession to operate Lisbon's subway and bus companies, which are publicly owned.
Sergio Monteiro, secretary of state for transport, said Friday the concession agreement will save the government some 215 million euros ($244 million) over the eight years of the contract.
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The contract is to be signed next month, though regulators' approval of the deal could take months.
Labor groups have staged numerous strikes to try and stop the privatization of services at the Metropolitano de Lisboa subway and Carris bus company.
Portugal's center-right coalition government is privatizing some of the country's debt-heavy public transport companies, including national airline TAP Air Portugal, in an effort to cut spending.