Brazil's Economic Outlook and Infrastructure Investment Opportunities

Brazil’s economic outlook and

infrastructure
investment opportunities
September | 2013

B R A Z I L I A N

Ministry of
Finance

G O V E R N M E N T

Ministry
of Finance

Summary
Foreword

5

Economic Outlook
Economic Development and Demand for Infrastructure
Capital Market Instruments
Highways
Railways
Ports
Airports
Oil and Gas
Electricity

7
33
45
53
65
79
83
93
101

Appendix – Main types of business organizations in Brazil
Useful Links
Glossary

121
126
128
3

Ministry
of Finance

Foreword
Brazil currently presents an enormous opportunity for investment in infrastructure.
The Brazilian economy has changed substantially over the last ten years. From 2003 to 2012, real GDP increased by
41 percent, real total wages by 65 percent and domestic retail sales by 119 percent. It was a period of consolidation
for the domestic market, based on income growth and social inclusion. The country is currently among the biggest
markets in the world. In the last decade, investments grew by 71 percent, above GDP growth rates, but they should
increase even further in order to become the new engine of economic development.

Foreword

Eonomic growth has brought about challenges, particularly for the long term. Above all, Brazil needs to build up
and modernize its infrastructure. That is the reason why President Dilma Rousseff launched the Energy and Logistics
Investment Program in 2012, consisting of concessions for highways (7,500 km), railways (10,000 km), airports (Rio
de Janeiro and Belo Horizonte) and ports. The implementation of the Program will not only reduce costs and improve
competitiveness for all industries, but also keep Brazil on the sustainable growth path that has been a characteristic
of the Brazilian economy over the last decade.
In oil and gas, the 11th Bidding Round in May 2013 was very successful, and both the 12th Bidding Round and the
1st Round of the Pre-Salt Layer are scheduled for the end of 2013. In electricity, many auctions are being carried out
until 2017 for the generation of 33,000 MW (from hydropower, wind power and other sources) and the installation of
21,000 km of transmission lines.
As far as short term perspectives are concerned, Brazil resumed economic growth in 2013, after a small period of
deceleration due to the deepening of the international crisis. In the second quarter, GDP grew 6.0 percent (quarterover-quarter, seasonally adjusted annual rate), one of the highest rates among G20 countries. The sustainability of
the economic recovery is supported by high levels of investment, which increased 9.0 percent in the second quarter

5

Ministry
of Finance

of 2013 when compared to the second quarter of 2012. Furthermore, manufacturing shows signs of improvement,
after two years of difficulties brought about by the international crisis.
The outlook for the world economy, however, remains tenuous. Although there are signs of economic recovery in
developed countries, with demand picking up in some advanced countries, the turmoil created by the expectation
of tapering in U.S. monetary stimulus severely affected some emerging economies. World trade growth is still
disappointing, posing challenges for economies heavily dependent on foreign markets.
The Brazilian economy is prepared to face the challenges posed by the international economy. In addition to its
considerable size – 200 million people, mostly belonging to the middle social classes –, the domestic market has
been growing at an annual rate of over 6 percent in the last five years. Brazil’s banks and financial markets are among
the soundest and most dynamic in the world. International reserves of around US$ 370 billion vis-à-vis short term
foreign debt of US$ 40 billion give monetary authorities the capacity to intervene if necessary. In 2012, foreign direct
investment inflows to Brazil were US$ 65.3 billion, the fourth largest in the world. In the first half of 2013, FDI inflows
amounted to US$ 30 billion.
Foreword

After a decade of consolidation of the domestic market, Brazil is ready for another decade of growth, now supported
by investments, particularly in infrastructure. Private businesses and investors, both domestic and foreign, have the
opportunity to take part in this process.

6

Ministry
of Finance

The world economy in the second quarter of 2013
GDP, QoQ seasonally adjusted annual rate, in % change, second quarter 2013

1.2

1.7
Canadá
Canada

Euro
area

2.5

United
kingdom Germany
France 2.9
2.9
1.9
-1.2

Russia
8.5

Italy
Turkey

2.3

China
India

-2.9

3.8

7.0

Economic Outlook

-1.3

USA

-1.0

Japan
South
4.5 Korea

Mexico
5.6

6.0

2.0

Brazil

3.0

2.4
Australia

Chile
Below or equal to 3%
Above 3%

Indonesia

South Africa

Source: International Monetary Fund
(IMF) and Bloomberg
Produced by: Ministry of Finance
8

Ministry
of Finance

Slow recovery of advanced economies and China
Purchasing Managers Index (PMI), manufacturing, in points

55.7
51.2
51.1

20
13
Se
p

20
13
Ja
n

Ju
l2
01
2

20
12
Ja
n

Ju
l2
01
1

Ja
n

20
11

China

Ju
l2
01
0

20
10

Euro Zone

Ja
n

20
09
Au
g

USA

Economic Outlook

60
58
56
54
52
50
48
46
44
42
40

Source: ISM (for USA) and HSBC/Markit

9

Ministry
of Finance

United States recovery: a double-edged sword
10-Year U.S. Treasury yields, in % per annum
Uncertainty about the tapering of the FED monetary stimulus may trigger exchange-rate and financial volatility in
emerging countries.

4.0

Economic Outlook

3.5
3.0
2.5

2.69

2.0
1.5

13

Source: Bloomberg

18

Se

p

20

13
20
Ja
n

12
20
Ja
n

Ja
n

20

11

1.0

10

Ministry
of Finance

The long term appreciation of the Brazilian real has been partially reversed in 2013
Nominal exchange rate, in U.S. dollar/national currency, index (January 2007 = 100)

150

Economic Outlook

120
Brazil

South
Africa

Mexico

90

94.1
85.8
India

Turkey

20
13
Se
p

3

Source: Bloomberg

17

20
1
Ja
n

2
20
1
Ja
n

1
20
1
Ja
n

0
20
1
Ja
n

9
20
0
Ja
n

8
20
0
Ja
n

Ja
n

20
0

7

60

72.9
70.8
69.7

11

Ministry
of Finance

Volatility did not affect the capital account of the balance of payments
In US$ million

2012
July
Jan-July
-3,746
8,307
7,509
8,440
1,343
-588

-28,990
53,580
42,240
38,169
3,707
7,537

-9,018
9,315
4,019
5,212
3,898
1,418

-52,472
58,902
41,259
35,239
17,981
-437

2013
Estimate*
-75,000
83,000
65,000

Economic Outlook

Current Account
Financial Account
Direct Investment (net)
FDI
Portfolio Investment
Other Investments

2013
July
Jan-July

* Central Bank of Brazil estimate
Source: Central Bank of Brazil

12

50

1.7

4.6

6.6

9.6

9.9

12.2

12.4

12.7

19.9

25.1

25.5

45.4

51.4

57.0

62.4

65.3

121.1

167.6

100

0

Economic Outlook

U
Stnite
at d
es
Ch
in
a
Br
az
Ki U il
ng ni
doted
Au m
st
r
Fe R alia
de us
ra sia
tio n
Ca n
na
da
In
di
a
Fr
an
In
c
do e
ne
sia
M
ex
ico
Tu
rk
ey
Sa
Ar u
ab d
ia i
Ko
re
a
Ita
Ge ly
r
So ma
ny
ut
h
Af
ric
a
Ja
pa
n

Ministry
of Finance

Confidence: high inflows of foreign direct investment

Foreign direct investment in G-20 countries, 2012, in US$ billion

200

150

Source: UNCTAD

13

Ministry
of Finance

Public sector net debt drops consistently and stable gross debt

Public Sector
Net Debt

60
55

58.0

57.4

60.9

58.7
53.4

50

59.4
Economic Outlook

56.4

35.2

General
Government
Gross Debt

65

34.1

Public sector net debt and General government gross debt, in % of GDP

54.2

45

36.4

39.2

42.1

38.5

45.5

47.3

48.4

50.6

35

54.8

60.4

40

*
13
20

12
20

11
20

10
20

09
20

08
20

07
20

06
20

05
20

04
20

03
20

20

02

30

* July 2013

14

Ministry
of Finance

Brazil’s international reserves in a comfortable situation
International reserves, in US$ billion (July 2013)

3,500
1,200

36

39

46

56

62

72

93

104

106

168

252

330

374

480

685

1,188

300

3,497

600

a
iA
ra n
bi
a
**
Ru
ss
ia
**
*
Br
az
il
Ko
re
a
In
di
a
M
ex
ic
o
Ca
na
da
Tu
r
In key
do
Ge nes
Un
ia
r
ite ma
ny
d
Ki
ng **
do
m
Fr
*
an
ce
Au
**
st
ra
lia
So
**
ut
h
Af
ric
a
I ta
ly
**

ud

Ja
p

Source: Bloomberg

Sa

Ch
i

na

*

0

* June 2013
** May 2013
*** January 2013

Economic Outlook

900

15

Ministry
of Finance

Brazil’s international reserves 58% above annual imports
Reserves-to-imports of goods ratio, in %, July 2013

200

Economic Outlook

150

43%

42%
Tu
rk
ey

co
ex
i
M

ne
s
do
In

So
Af uth
ric
a

44%

49%
ia

56%
a
di
In

150%
**
ss

ia

l*
Ru

Ch
i

na

**

0

Br
az
i

185%

50

158%

100

* August 2013
** June 2013
Source: Bloomberg

16

Ministry
of Finance

Brazil’s international reserves much above external debt levels
Reserves-to-short term external debt ratio, in %, March 2013

1,000
800

Economic Outlook

600
400
200

952%

572%

462%

303%

232%

229%

108%

167%

92%

Tu
rk
ey

nt
in
a
Ar
ge

S
Af out
ric h
a

co
ex
i
M

ne
si
a
In
do

a
In
di

Ch
in
a

a
ss
i
Ru

Br
az

il

0

Source: Bloomberg and International
Monetary Fund (IMF)

17

Ministry
of Finance

Brazil’s international reserves have not been changed even under international uncertainty
International reserves, in US$ billion

400

US$ 373.6 bn

375

Economic Outlook

350

325

13


12

Se

p

20

20
13
Au
g

l2
01
3
Ju

13
20
n
Ju

20
13
M

ay

20
13
Ap
r

13
M

ar

20

13
20
Fe
b

Ja
n

20

13

300

18

Ministry
of Finance

The role of derivatives in Brazil: second largest market for interest-rate options and futures
In billions of U.S. dollars and millions of contracts

US$ Billion

Number of
contracts traded
in 2012 (millions)

30,000

20,000

25,000

Brazil / BVMF*

25,212

501

Mexico /Mexder

241

31

Russia / Moscow Ex

58

21

15,000

South Africa / JSE

38

3

10,000

Singapore / SGX

0

1

India / NSE-BSE-MCX

0

0

Malaysia / Bursa Malaysia

0

0

China**

0

0

Turkey***

0

0

25,212

241

5,000

58

38

0

ut

h

Af
r

ic
a
Tu
rk
ey
**
*

ia
ss
So

Ru

ex
i
M

Br
az
i

l*

co

0

* For Brazil, indicators only include
futures and options operations
** In China, currency derivatives are not
traded (FX restriction)
*** Turkdex Annual Market
Statistics (Annual Fact Book 2012)

Economic Outlook

Financial volume
traded in 2012
(US$ billion)

Source: World Federation of Exchanges

19

Ministry
of Finance

Sixth largest market for currency options and futures
In billions of U.S. dollars and millions of contracts

437

413

South Africa / JSE

15

17

Mexico /Mexder

100

98

Turkey / Turkdex ***

Af
ric

co
So

ut

h

éx
i

ia
M

ss

-

a

0

Ru

Singapore / SGX

di

-

a
Tu
rk
ey
**
*

-

0

In

0

China **

0

il*

1

1,000

Br
az

13

Malaysia / Bursa
Malaysia

2,000

13

Russia / Moscow Ex

3,000

15

868

100

4,727

821

437

4,525

4,000

* For Brazil, indicators only include
futures and options operations
** In China, currency derivatives
are not traded (FX restriction)
*** Turkdex Annual Market
Statistics (Annual Fact Book 2012)

Economic Outlook

Brazil / BVMF*
India / NSE-BSE-MCX

US$ Billion
5,000

821

Country

Number of contracts (in millions)
traded in the same basis
(if contracts were all of USD 1,000)

4,525

Currency Options and Futures
Financial volume
traded in 2012
(US$ billion)

Source: World Federation of Exchanges
/ Futures Industry Association Magazine
March 2013

20

Ministry
of Finance

In Brazil, the large market for foreign exchange derivatives
stimulates companies to use currency hedging
Foreign exchange derivative transactions over spot transactions, in %

101%

134%

an
Ja
p

ss

ia

136%

Ru

tr
al

ia

137%

Au
s

138%

co
ex
i

Eu
ro

161%

a
M

ad

161%

Ca
n

ob

al

175%

Gl

178%

Un

ite

d

do

m

St
at
es

207%

ite

d

Ki

ng

Af
r

ic

a

231%

ut
h
So

Source: Bank for International
Settlements (BIS)

Un

252%

247%

a

Ko
re
a

di
In

347%

419%

il
Tu
rk
ey
Ch
in
a

Br
az

200
150
100
50
0

Economic Outlook

450
400
350
300
250

21

Ministry
of Finance

G20 emerging markets external sector
Current account, in % of GDP, second quarter of 2013

2.4
-1.9**

a*

a*

-5.8

Af
ric

di

h
ut
So

a
In

do

ne

si

il
Br
az

co
ex
i
M

na
Ch
i

*
ia
ss
Ru

-5.1

-5.9

Tu
rk
ey
*

-3.3

-3.2

In

-1.3

9.5-

3.0

Economic Outlook

4
3
2
1
0
-1
-2
-3
-4
-5
-6
-7

* First quarter 2013
** Excluding the oil account, the
Brazilian current account deficit would
be 1.9% of GDP. There was a temporary
delay in the register of the 2012
imports and there were several stops
for maintenance in Petrobras platforms.
Additionally, delays in the start of new
producing systems in the last few years
and existing problems in the post-salt
systems resulted in a slowdown in the
domestic extraction of oil and gas since
2010. All these factors that interfered
in the Brazilian trade balance will start
to improve significantly in the second
half of 2013. Ten new platforms will be
starting operations in 2013/2014, and
several others will start operations in
the following years, doubling production
until 2020, according to EIA estimate
Source: Bloomberg

22

Ministry
of Finance

Oil and gasoline accounted for a large part of the decrease in trade surplus
Trade balance, total and ex-oil, in US$ billion

40

30

Economic Outlook

20

Total
balance
Total balance
ex-oil and other
oil products

10

4.5

20
13
*

19.4 26.0

20
12

29.8 26.2

20
11

20.2 19.5

20
10

20
09

0

25.3 12.5

19.3

* On a 12-month basis up to July 2013
Source: Ministry of Development,
Industry and Trade (MDIC)

23

Ministry
of Finance

Despite difficulties, investments are recovering in Brazil
Gross fixed capital formation, seasonally adjusted, in % QoQ

5
4
Economic Outlook

3
2
1

1.5

0
-1
-2

4.7

3.6
Source: Brazilian Institute of Geography
and Statistics (IBGE)

-1.4
3Q 2012

4Q 2012

1Q 2013

2Q 2013

24

Ministry
of Finance

Inflation within the target range since 2004
Broad Consumer Price Index (IPCA), in % YoY

IPCA

Economic Outlook

Upper
Bound
Target
core

13

*

5.8

20

12

5.8
20

11

6.5
20

10

5.9
20

09

4.3
20

08

5.9
20

07

4.5
20

06

3.1

20

05

5.7
20

04

7.6
20

03

9.3
20

02

12.5
20

01

7.7
20

00

6.0
20

19

99

8.9

Lower
Bound

* Average forecast for 2013, according
to the Central Bank of Brazil market
research on September 6, 2013
and Statistics (IBGE) and Central Bank
of Brazil
25

Ministry
of Finance

G20 emerging markets inflation
Consumer price index, in % YoY, August 2013

12
10

6

8.8

10.7
**
In
di

a

Source: Bloomberg

In

do
ne

si

a

8.2
Tu
rk
ey

6.5
a
si

a
ic
Af
r
ut
h

* July 2013
** June 2013

So

Ru
s

6.4
*

6.1
il
Br
az

3.5
co
ex
i
M

na

0

Ch
i

2

2.5

4

Economic Outlook

8

26

Ministry
of Finance

Sound financial system
In %, latest available data

Basel Index (Capital Adequacy)
17.9
17.4
17.0
16.3
16.1
15.7
15.7
14.4
14.3
14.3
14.2
13.4
13.3
13.1
11.8
11.4

Net Assets/
Short-term Liabilities
Brazil 183.1
Germany 140.8
South Korea 111.3
Russia 87.6
Italy 80.1
USA 77.4
Turkey 76.4
Canada 56.3
Japan 51.3
Mexico 47.3
Australia 43.5
United Kingdom
38.0
South Africa
33.0
India
27.0

10.0
9.0
2.8
0.6

Economic Outlook

Germany
Turkey
Brazil
Mexico
Canada
South Africa
United Kingdom
USA
France
South Korea
Japan
Russia
Italy
India
Australia
Spain

(Provisions minus
Delinquencies)/Capital
Brazil
Mexico
Argentina
Chile
-3.1
South Korea
-3.1
Turkey
-5.9
Canada
-9.9
Russia
-12.1
India
-14.7
USA
-15.5
Australia
-16.1
United Kingdom
-19.4
France
-21.4
Japan
-23.6
South Africa
-27.6
Spain
-73.7
Italy

(IMF) - Fiscal Soundness Indicators

27

Ministry
of Finance

Real estate loans have still huge opportunities of expansion in Brazil
Real estate loans, annual growth rate, in %

Despite their growth, in July 2013 real
estate loans represented only 7.7% of
Brazil’s GDP, a much lower rate than in
developed countries and most
emerging economies

70
60

40

Economic Outlook

50

34.0

30
20
10

3
01
Ju
l2

13
20

2
Ja
n

01
Ju
l2

12
Ja
n

20

1
01
l2
Ju

11
20

0
Ja
n

01
l2
Ju

10
20

9
Ja
n

00
Ju
l2

09
Ja
n

20

8
00

l2

Ju

M

ar

20

08

0


28

Ministry
of Finance

Brazil presents sound fiscal accounts
Budget balance, in % of GDP

Primary Results
Brazil

2006-2008
2010-2013*

Nominal Result
2006-2008
2010-2013*

-2.8
-2.5

-1.5

Asia

-1.5

United States

-1.9
-7.1

Latin America

-1.1
-2.3

Euro Zone

-1.4
-4.2

Asia

-1.6
-3.0

United States

-3.8
-9.0

1.2
0.0

Economic Outlook

Euro Zone

Brazil

3.0
1.3

Latin America

3.3
2.6

* IMF estimates
(IMF) - Fiscal Monitor and
Central Bank of Brazil

29

Ministry
of Finance

Confidence: low spreads for sovereign bonds
10-year Brazilian Global bonds* and U.S. Treasury yields, in % per annum

7.0

6.1

Brazilian
sovereign bonds

5.8

5.6
4.2

3.0

2.4

2.8

4.2
3.1

3.9

3.6

3.3

4.5

Economic Outlook

5.0

4.8

3.4
2.7

U.S. Treasuries

2.8

1.6

1.9

1.8

1.4

* Yields at issue date
13
M

ay

20

12

Source: National Treasury Secretariat
(STN)

9

5

Se

p

20
Ja
n

20

12

1
3

7

Ju

l2

01

0
Ju

l2

01

10
20
Ap
r

15

z2
De
15

27

9
00

09
20
ay
M
7

6

Ja
n

20

09

0.0

30

0
Ju 07
l2
0
No 07
v
20
0
M
ar 7
20
Ju 08
l2
0
No 08
v
20
0
M
ar 8
20
Ju 09
l2
0
No 09
v
20
0
M
ar 9
20
Ju 10
l2
0
No 10
v
20
1
M
ar 0
20
Ju 11
l2
0
No 11
v
20
1
M
ar 1
20
Ju 12
l2
0
No 12
v
20
1
M
ar 2
20
Ju 13
l2
01
3

ar
2
2.1

2.0

2.7

2
1.8

4
5.5

5.3

5.1

5.0

5.2

4.9

4.7

4.5

6.9

6.6

6.7

6.5

6.4

6.6

6.9

7.1

6.8

6.7

6.4

6.3

6.2

7.8

7.5

7.7

7.6

8.4

8.4

8.8

8

7.2

6
5.9

10.0

9.9

11.5

11.5

11.5

11.3

11.4

11.4

11.8

11.4

11.3

11.8

11.6

11.3

12.2

12.3

12.3

12.1

11.9

11.9

11.4

11.4

11.3

14
13.7

14.5

14.4

14.6

14.8

14.3

14.4

13.9

13.8

13.4

13.3

13.2

12

11.1

10.6

10.6

10.2

9.8

11.2

10
9.7

15.5

16

0
Economic Outlook

M

Ministry
of Finance

Increasing number of non-resident investors in Brazilian public debt

Non-resident share in federal public debt, in % of total DFPD*

18

15.5

* Domestic Federal Public Debt

Source: National Treasury Secretariat
(STN)
31

Economic Development
and Demand for
Infrastructure

Ministry
of Finance

Domestic market: dynamism of retail sales
Broad retail sales, seasonally adjusted, in % YoY

15
12

5.8
*
13
20

8.0
12
20

6.6
11
20

12.2
10
20

6.8
09
20

9.9
08
20

13.6
07
20

6.4
06
20

3.1
05
20

04

0

20

3

11.1

6

* On a 12-month basis up to July 2013

Economic Development and
Demand for Infrastructure

9

and Statistics (IBGE)

34

Ministry
of Finance

Sustainable labor market ensures dynamic domestic demand
New formal jobs, in millions

3.0

19.90 million jobs

2.5

1.5

For 2012 and 2013, updates after the
official release date were taken into
consideration

1.0

* January to July 2013
Source: Ministry of Labor and
Employment

13

0.9

20

12

1.3

20

11

2.2

20

10

2.9

20

09

1.8

20

08

1.8

20

07

2.5

20

06

1.9

20

05

1.8

20

04

1.9

20

03

0.9

20

02

1.5

20

01

1.0

20

00

1.2

20

99

0.5

19

98

0.4

19

97

0.3

19

19

19

0.1

96

0.1

95

0.0

*

0.5


2.0

35

Ministry
of Finance

Increasing demand for infrastructure services: airline passengers
Airline traffic, in millions of passengers

120

2002-2012: 182.3% growth

100


80
60

101.4
12
20

92.6
11
20

77.2
10
20

62.8
09
20

56.0
08
20

52.1
07
20

47.7
06
20

44.1
05
20

35.7
04
20

33.4
03
20

35.9
02
20

36.0
01

20

00

0

20

20

34.0

40

Source: National Agency for Civil
Aviation (ANAC)

36

Ministry
of Finance

Growing external trade
Brazilian trade flow (exports plus imports), in US$ billion

500

2002-2012: 332.4% growth

400

* 474.7
13

12 465.7

20

20

11 482.3

10 383.7

20

09 280.7

20

08 370.9

20

07 281.3

20

20

06 229.2

05 192.1

20

04 159.5

20

03 121.5

20

02 107.7

20

20

01 113.9

00 111.0

20

99 97.2

20

98 108.8

19

97 112.7

19

19

19

0

19

95 96.4

100

96 101.0

200

* On a 12-month basis
up to August 2013


300

Source: Ministry of Development,
Industry and Foreign Trade (MDIC)

37

Ministry
of Finance

Significant growth in port trade volume
Total cargo handling in ports, in millions of tons

2003-2012: 58.4% growth

950
900


850
800
750

902.9
*
13
20

904.0
12
20

885.6
11
20

833.9
10
20

732.9
09
20

768.3
08
20

754.7
07
20

692.8
06
20

649.4
05

20

03

500

20

550

04

600

20

570.8

650

620.7

700

* On a 12-month basis up to March 2013
Source: National Agency for Water
Transportation (ANTAQ)

38

Ministry
of Finance

Vehicular traffic
In thousand vehicles per km per year, on highways under concession

2002-2012: 86.6% growth

120
100

60

111
*
13
20

105
12

11
20

10
20

09
20

08
20

07
20

06
20

05
20

04
20

03
20

02
20

01
20

20

00

0

20

99

89

69

60

69

67

65

61

56

57

51

20

43

40

* Estimate based on monthly
average up to August 2013


80

Source: Brazilian Association of
Highway Concessionaires (ABCR)

39

Ministry
of Finance

Vehicle sales more than doubled in ten years
New vehicles (buses, trucks, light commercial vehicles and cars), in million of vehicles

4.0

2002-2012: 153.5% growth

4th largest vehicle
market in the world

3.5

2.5
2.0
1.5

3.8
20
13
*

3.8
12
20

3.6
11
20

3.5
10
20

3.1
09
20

2.8
08
20

2.5
07
20

1.9
06
20

1.7
05
20

1.5
04
20

1.4
03

20

02

0.0

20

0.5

1.5

1.0

* On a 12-month basis
up to August 2013


3.0

Source: Brazilian Association of
Automotive Vehicle Manufacturers
(ANFAVEA)
40

Ministry
of Finance

Railroad volumes
Revenue tonne kilometers (RTKs), in billions

2002-2012: 77.4% growth

300


266
232

298
12
20

291
11
20

278
10
20

244
09
20

271
08
20

258
07
20

232
06
20

221
05
20

203
04
20

03
20

02
20

130

168

164

182

198

Source: National Transportation
Agency (ANTT)

41

Ministry
of Finance

Brazilian harvest in record figures
Brazilian grain harvest*, in millions of tons

210
187.1

190
170
150
130

135.1
144.1

166.2
149.3

122.5

*
/2
0

13
*

12
12

/2
0

* Preliminary data:subject to change by
Conab/MAPA
** Conab estimates in September 2013

20

11
20
11

/2
0

0
20
10

01

9

9/
2
20
0

00

8

8/
2
20
0

7/
2

00

07
20
0

/2
0

06
20
06

/2
0

20
05

20

04
/

20

05

4
00

3

3/
2

00
2/
2

20
0

00

2

96.8

1/
2
20
0

0/
2

00

1

70

114.7
119.1

20
0

110 100.3
90

20
0

131.8

123.2


162.8

Source: Ministry of Agriculture,
Livestock and Food Supply (MAPA)
42

Ministry
of Finance

Agricultural leadership
Brazil in the global ranking, by production and exports quantities, 2011

Exporter

Coffee

1

1

Processed beef

1

1

Orange Juice

1

1

White sugar

2

1

Chicken

2

1

Tobacco

2

1

Soybean

2

2

Beans

2

16

Corn

3

3


Producer

Source: Food and Agriculture
Organisation (FAO)
43

Ministry
of Finance

Financial Instruments for Infrastructure Investments

How can non-resident investors negotiate debt securities and funds in Brazil?
CMN Resolution 2,689 of year 2000, which rules on investments by non-resident investors in
the financial and capital markets of investment, provides all necessary information
• More Info:

CMN Resolution 2,689
https://www3.bcb.gov.br/normativo/
detalharNormativo.do?method=deta
lharNormativo&N=100014927

Brazil does not impose taxes
on the international remittance of profits and dividends

Produced by: Ministry of Finance and
Brazilian Development Bank (BNDES)
46

Ministry
of Finance

• Debêntures de Investimento e Certificados de Recebíveis Imobiliários (CRI)
Definition
Investment Debentures and
Real Estate Receivables Certificates

Benefits for
non-resident investors*
• Zero Income Tax Rate (IR)
• Zero Tax on Financial Operations (IOF)

Minimum Requirements

* In case of investments from countries
which are not subject to a 20% (or higher)
income tax rate (“tax havens”), the above
mentioned tax benefits do not apply,
unless it is related to a wealth fund


• Weighted average maturity: over four years.
• Return: CRI pays interest at a fixed rate or at a floating rate
pegged to an inflation index or the Reference Rate (TR). Total or
partial use of post-fixed rate of interest are forbidden.
• No repurchase: by the issuer or related party in the first two
years after issuance and early liquidation, except in cases to be
regulated by Brazil’s National Monetary Council (CMN).
• Required evidence documents: security should be
registered with clearing houses duly authorized by the
Central Bank of Brazil or the Brazilian Securities and Exchange
Commission (CVM).
• Simplified procedure: to demonstrate the purpose of
allocating resources into the future payment or reimbursement
of expenses, costs or liabilities related to investment projects,
including those aimed at R&D&I (research, development and
innovation).
• No resale commitment: undertaken by the buyer.
• Yield payment frequency: if any, it must be at least 180
days apart.

47

Ministry
of Finance

• Fundos de Investimento em Direitos Creditórios (FIDC)
Definition

Benefits for non-resident investors*

Investment Fund in
Credit Rights

• Zero Tax on Financial
Operations (IOF)



• Term of duration: minimum of six years.
• No payment, fully or partially: of principal of the Fund’s quotas in the first two years from the
closing date of the public offering of the quota distribution that constitute the initial assets of the
Fund, except in cases of the Fund’s early liquidation mentioned in the Fund’s regulation.
• No acquisition of quotas: by the seller or by the issuer or by any parties related to them, except
in case of subordinated quotas for purposes of amortization and withdrawal.
• Amortization plan of quotas: including those from incorporated yields, if any, must be at least
180 (one hundred and eighty) days apart.
• Required evidence documents: quotas must be admitted to trading on an organized securities
market or registered with a registry system duly authorized by the Central Bank of Brazil or the
Brazilian Securities and Exchange Commission (CVM) under their respective jurisdiction.
• Simplified procedure: to demonstrate the purpose of allocating resources into a transaction of
investment projects, including those aimed at R&D&I.
• Mandatory presence of the following: in the assignment agreement, regulation and prospectus, if any, in a manner to be determined by CVM:
• Goal of the project or the beneficiary projects;
• Estimated beginning and end periods or, for ongoing projects, description of the current stage
and estimated end period;
• Estimated volume of financial resources required to carry out the project or not initialized
projects or for the completion of ongoing projects;
• Estimated percentage of funds to be raised with the selling of the credit rights compared to
the financial resource requirements of the beneficiary projects.
• Fund’s equity: consists of at least 85% (eighty-five) percent of credit rights and, for the remaining
portion, of federal government securities, repurchase agreements backed by government bonds or
mutual fund quotas that invest in federal government bonds.

* In case of investments from countries
which are not subject to a 20% (or
higher) income tax rate (“tax havens”),
the above mentioned tax benefits do not
apply, unless it is related to a wealth fund

48

Ministry
of Finance

• Debêntures de Infraestrutura
Benefits for nonDefinition -resident investors*
Infrastructure
Debentures



• Zero Income Tax Rate (IR) • Issuance: must be between January 2011 and December 2015.
• Weighted average maturity: over four years.
• Zero Tax on Financial
Operations (IOF)
• Return: Debentures pay interest at a fixed rate or at a floating rate pegged to an inflation index or the
Reference Rate (TR). Total or partial use of post-fixed rate of interest are forbidden.
• No repurchase: by the issuer or related party in the first two years after issuance and early liquidation,
except in cases to be regulated by Brazil’s National Monetary Council (CMN).
• Required evidence documents: security should be registered with clearing houses duly authorized
by the Central Bank of Brazil or the Brazilian Securities and Exchange Commission (CVM).
• Simplified procedure: to demonstrate the purpose of allocating resources into the future payment or reimbursement of expenses, costs or liabilities related to investment projects, including those aimed at R&D&I.
• No resale commitment: undertaken by the buyer.
• Yield payment frequency: if any, it must be at least 180 days apart.
Projects Approval:
• Priority investment projects: to be implemented in the infrastructure area, or intensive economic
production in research, development, and innovation. Also, according to the Decree n. 7,603 of year 2011,
projects should have:
• Approval Ordinance: issued and approved by the Ministry responsible for that sector
• Focus on deployment, expansion, maintenance, recovery, adaptation or modernization processes in
the following sectors:
• Logistics and transportation • Broadcasting
• Urban mobility
• Basic sanitation and
• Energy

• Irrigation
• Telecommunications
• Specific Purpose Companies (SPE): for management and implementation.
• Issuer: dealer or grantee or authorized contractors or lessee.

* In case of investments from
countries which are not subject
to a 20% (or higher) income tax
rate (“tax havens”), the above
mentioned tax benefits do not apply,
unless it is related to a wealth fund

49

Ministry
of Finance

• Fundos de Debêntures Incentivados
Definition
Brazilian Infrastructure
Bonds Investment Funds

Benefits for
non-resident investors*
• Zero Tax on Financial Operations (IOF)

• Concentration in investments: must hold at least 67% (sixty-seven) percent of the Fund’s net worth within the first two years
and 85% (eighty-five) percent in the remaining years.
• Fund of Funds (FIC) investments: must hold at least 95%
(ninety-five) percent of FIC net worth in the Infrastructure Bonds
Investment Fund’s quota.

50

Ministry
of Finance

• More Info (useful links):
CMN Resolution 3,974 of
year 2011

http://www.planalto.gov.br/
ccivil_03/_Ato2011-2014/2011/Lei/
L12431.htm

http://www.bcb.gov.br/pre/normativos/res/2011/pdf/res_3947_v1_O.
pdf

Law 12,715 of year 2012

Decree 7,632 of year 2011

ccivil_03/_Ato2011-2014/2012/Lei/
L12715.htm#art71

Decree 7,632/11
ccivil_03/_Ato2011-2014/2011/
Decreto/D7632.htm

Brazilian Financial and
Capital Markets Association
http://portal.anbima.com.br/Pages/
home.aspx



Law 12,431 of year 2011

51

Ministry
of Finance

Highway Concessions
Belém

MA

PA

Açailãndia

Parnamirim

Maceió

BR-153

Palmas

MT

Feira de Santana
Salvador

Lucas do Rio Verde

Campo
Grande

9

8

SP
PR
Mafra

SC
RS

Rio Grande

Porto Seguro

1

2

0

BR
-26

2

Estrela
D’Oeste
Maracaju

BR
-04

BR-050

5

BR-153

GO

BR-163

MS

3

MG

0

-06
BR

Highways

Divisa Alegre

Brasília
Anápolis
Goiânia

01

BR-1

Uruaçu

7

Cuiabá

Aracaju

BA

6

BR-116

BR-163

Sinop

Recife

PE

TO

Belo
Horizonte

Mucurí

4 ES

BR-262

Vitória

Juíz de Fora
Rio de
Janeiro
São Paulo
Santos

Além Paraíba
Campos

1
2
3
4
5
6
7
8
9

BR-116/MG
BR-040/MG-GO-DF
BR-101/BA
BR-262/MG-ES
BR-050/GO-MG
BR-153/GO-TO
BR-163/MT
BR-163/MS
BR-060/153/262/DF-GO-MG

Highways
Updated information available at
www.logisticsbrazil.gov.br
Source: National Logistics & Planning
Company (EPL)

54

Ministry
of Finance

Road Concession – BR-050: from Cristalina (GO) (BR-040 entry point) to MG/SP border
Object

Demand

• Section: BR-050, Entry Point of BR040/GO (Cristalina) – Border w/ MG/SP

Demand Projection (AADT):
2014 (54,232), 2019 (62,790), 2024
(76,046).

• Total Length: 426 km

Connects Brasilia, the state of São
Paulo and the South Region of the
country, crossing an important
agricultural and wholesale retail
center - the Minas Gerais triangle.

• Length to be widened: 219 km
The project includes widening,
maintenance and operation of the
highway. Other widening projects are
also planned to happen, including the
construction of 9 km of side roads.

Palmas

MT

BA
BR-153
BR-060

GO

Brasília

Goiânia

Cristalina
Catalão
Uberlândia
Uberaba

MS

MG
ES

BR-040

SP

BR-050

Vitória

RJ
Rio de Janeiro

São
Paulo

PR
Curitiba

Highway BR-050 GO/MG
To be awarded

Auction Concluded
on September 18th

Economic and
Financial Modeling
CAPEX*: US$ 1.3 billion
OPEX: US$ 869 million
Financing conditions:
Term: 25 years (Grace period: 5 years)
Rate: TJLP** + 2%a.a.
Real leveraged IRR: up to 16%
per year, in real terms.
Debt to equity ratio: 70% / 30%
Equity support: up to 49% of SPE***
or holding’s share capital
(Institutions: public banks and
pension funds)
Environmental licensing: Stateowned EPL is in charge of obtaining
Previous License (LP) and Installation
License (LI) of duplication works

* Without benefits and indirect
expenses
** TJLP - Long Term Interest Rate,
currently 5% p.a.
*** Special Purpose Entity

Highways

TO

Criteria
Term: 30 years
Criteria: lowest tariff

In the first half of September 2013,
the average exchange rate was
approximately US$ 1 = R$ 2.30
Company (EPL)

55

Ministry
of Finance

Road Concession – BR-040: Brasília (DF) – Juiz de Fora (MG)
Object

Demand

• Section: BR-040, Juiz de Fora (MG) – Entry Demand Projection: under study
point of BR-251 (Brasília - DF)
Connects two important economic
centers in Brazil - Rio de Janeiro and
Belo Horizonte - to the fourth most
populous city and the highest GDP
The project includes widening, maintenance per capita in the country - Brasilia.
and operation of the highway. Other
It is the main route for supply of
widening projects are also planned to
coal to steel parks.
happen, including the construction of side
roads between Luziania and Brasilia.
Brasília
Luziânia

BR-040

MG

Sete Lagoas

Belo Horizonte

ES

SP

BR-381

Juiz de Fora

RJ

Rio de
Janeiro
São Paulo

PR
Curitiba

Granted Section
180 Km

Highway BR-040
MG/GO/DF
To be awarded

Economic and Financial
Modeling
Rate: TJLP* + 2%a.a.
Real leveraged IRR: up to 16% per
year, in real terms.
Debt to equity ratio: up to 70% / 30%
Equity support: up to 49% of SPE**
pension funds)

Highways

GO

Criteria
Concession Term: 30 years
Number of Toll Plazas: 11

* TJLP - Long Term Interest Rate,
currently 5% p.a.
** Special Purpose Entity
Company (EPL)

56

Ministry
of Finance

Road Concession – BR-116: from BA/MG border (Divisa Alegre) to MG/RJ border (Além Paraíba)
Object

Demand

• Section: BR-116, RJ/MG Border (Além
Paraíba) - MG/BA Border (Divisa Alegre)

Demand Projection: under study

The project includes widening, maintenance
widening projects are also planned, including
the construction of 27 km of side roads.

Connects two important economic
centers in Brazil - Rio de Janeiro
and Salvador – across eastern
Minas Gerais.

GO
BA
Divisa Alegre

BR-116

Teófilo Otoni
Gov. Valadares

MG

ES
Muriaé
Além Paraíba

SP

São
Paulo

Rio de
Janeiro

RJ

Highway
BR-116 MG
To be awarded

Economic and Financial
Modeling
Real leveraged IRR: up to 16% per
year, in real terms.
Equity support: up to 49% of SPE**
pension funds)

Highways

Salvador

Criteria

currently 5% p.a.
Company (EPL)

57

Road Concession – BR-101:
from the entry point of BR-324 (BA) to the entry point of the BA-698 (Mucuri)
Object

Demand

TO
BA
Salvador

GO
BR-116

MG

BR-101

João
Belo Monlevade
Horizonte

ES

BR-262

SP

Mucurí

Vitória

BR-381
São
Paulo

RJ
Rio de
Janeiro

Highway BR-101 BA
To be awarded

Criteria

Economic and
Financial Modeling
OPEX: US$ 1.3 billion
Equity support: up to 49% of
SPE*** or holding’s share capital
pension funds)

expenses
* *TJLP - Long Term Interest Rate,
currently 5% p.a.

Highways

• Section: BR-101, Entry Point of BA-698 Demand Projection (AADT): 2014
(Mucuri) – Entry Point of. BR-324/BA
(57,392), 2019 (71,312),
2024 (87,140).
Connects the southern coast of Bahia
• Length to be widened: 551.3 km
to the states of Espírito Santo and Rio
de Janeiro. BR-101 is a very important
road connecting the northeast with the
highway. Other widening projects are
southeast and southern regions along
also planned to happen, including the
the coastal line, where lives a great
share of Brazilian population. Important
ports are also connected by this road.

Ministry
of Finance

Company (EPL)

58

Road Concession – BR-262: from the entry point of BR-381 (J. Monlevade) to the entry
point of BR-101/ES
Object

Demand

• Section: BR-262, Entry Point of BR-381
(J. Monlevade) – Entry Point of BR-101/ES
widening projects are also plannedw,
including the construction of a ringroad and
13 km of side roads.

2014 (7,549), 2019 (9,297),
2024 (11,388)

TO
BA
Salvador

GO
BR-116

MG
Belo
Horizonte

BR-262

SP

BR-101

Mucurí
Governador
Valadares
João
Monlevade ES
Vitória

BR-381
São
Paulo

RJ
Rio de
Janeiro

Highway
BR-262 ES/MG
To be awarded

Criteria

Economic and
Financial Modeling
CAPEX*: US$ 916 million
OPEX: US$ 739 million
pension funds)

expenses
currently 5% p.a.

Highways

The state of Minas Gerais (MG)
has the third largest population
in Brazil. This road gives access to
the ports of the state of Espirito
Santo, the main gateway to MG
exports and imports, constituting
an alternative route for the flow of
MG production.

Ministry
of Finance

Company (EPL)

59

Ministry
of Finance

Road Concession – BR-153: from Palmas (TO) to Anápolis (GO) (BR-060 entry point)
Object

Demand

Criteria

Demand Projection (AADT): 2014
(99,926), 2019 (119,627), 2024 (146,113).

expenses
currently 5% p.a.

Highways

Concession Term: 30 years.
Number of Toll Plazas: 11.
Connects Palmas, Goiânia and the southeast Criteria: lowest tariff.
of the country, crossing a major Brazilian
Economic and
agricultural pole. Palmas is the geographical
Financial Modeling
center of the country, with the vocation
to become an important hub. BR-153 is
the main road to reach the city of Manaus
from other regions, benefiting from the
highway. Other widening projects
heavy traffic of Manaus Free Zone, which
are also planned, including the
concentrates Brazilian electronic production, Financing conditions:
among other important industries.
TO-080
Palmas
TO
Gurupi
BA
MT
Debt to equity ratio: 70% / 30%
BR-153
Uruaçu
BR-060
GO
Anápolis
BR-040
pension funds)
BR-153
MG
Environmental licensing: StateHighway
BR-050
BR-153 GO/TO
owned EPL is in charge of obtaining
ES
BR-262
To be awarded
MS
SP
RJ
• Section: BR-153, Anápolis (Entry
Point of BR-060/GO) - Entry Point of
TO-080; TO-080, Entry Point of
BR-060/GO- Palmas

Company (EPL)

60

Ministry
of Finance

Road Concession – BR-060 (DF/GO), BR-153 (GO/MG) and BR-262 (MG)
Object

Demand

• Section: BR-060, Entry Point of BR-251 (DF) –
Entry Point of BR-153/GO; BR-153, Entry Point of BR060/GO – Entry Point of Br-262/MG; BR-262, Entry
Point of BR-153/MG – Entry Point of BR-381 (Betim)

Demand Projection
(AADT): 2014 (160,374),
2019 (195,551), 2024
(238,453).

• Total Length: 1,177 km

Connects Brasília, Goiânia,
Uberaba and Belo Horizonte,
crossing a major Brazilian
agricultural pole.

TO-080
Palmas

TO
MT

Gurupi

BA

BR-153
Uruaçu

GO

BR-060

Anápolis

BR-040

BR-153

BR-050

MS

MG

Highway BR-060/153/262
DF/GO/TO

ES

BR-262

SP

To be awarded

RJ

Economic and
Financial Modeling
Term: 25 years (Grace period: 5
years)
pension funds)

expenses
currently 5% p.a.

Highways

The project includes widening, maintenance and
operation of the highway. Other widening projects
are also planned, including the construction of 27
km of side roads and ringroad in Goiânia.

Criteria
Term: 30 years.
Number of Toll Plazas: 11.
Criteria: lowest tariff.

Company (EPL)

61

Ministry
of Finance

Road Concession – BR-163: from MT/MS border to MS/PR border
Object

Demand

• Section: BR-163, Border MT/MS – Border
w/ MS/PR

Demand Projection: under study

Criteria

Connects Cuiabá, Campo Grande
and the Southeast/South Regions
of Brazil, constituting an alternative
route for the flow of Brazilian
agricultural production.

widening projects are also planned.

BA
Cuiabá

GO

MG
ES

MS
Campo Grande
Nova Alvorada
Dourados

BR-262
BR-267
BR-163 PR
Curitiba

SP

Highway BR-163
/267/262 MS
RJ

To be awarded

pension funds)

expenses
currently 5% p.a.

Highways

BR-163
BR-364

Economic and
Financial Modeling

TO

MT

Term: 30 years.
Criteria: lowest tariff.

Company (EPL)

62

Ministry
of Finance

Road Concession – BR-163: from Sinop (MT) to MT/MS border
Object

Demand

• Section: BR-163, Sinop – Border MT/MS
widening projects are also planned, including
20 km of ringroad (in 5 different cities) and
44 km of side roads.
TO

MT
Posto Gil

Connects Sinop, Cuiabá, Campo
Grande and the North/Southeast/
South Regions of Brazil, crossing
an important Brazilian agricultural
production.

BR-163
BA
Cuiabá
Rondonópolis

BR-364

GO

MG

Goiânia

Highway BR-163 MT
ES

MS
Campo Grande

BR-262
SP

BR-267
BR-163

To be awarded

PR
Curitiba

RJ

Criteria
Term: 30 years

Economic and
Financial Modeling
per year, in real terms
pension funds)

expenses
currently 5% p.a.

Highways

Sinop

2014 (5,815), 2019 (7,140), 2024
(8,757)

Company (EPL)

63

Ministry
of Finance

Railway Network

Belém /
V. Conde
Santarém

Itaqui

Pecém

Açailândia

Manaus
Pacific
Link

Parnamirim

Estreito

Eliseu
Martins

Porto Velho

Barreiras
Salvador
Aratu

Uruaçu

Ilhéus
Rondonópolis

Maracaju

Suape

Belo Horizonte
Estrela
d’Oeste
Vitória
Rio de Janeiro
Itaguaí
Santos
Paranaguá
S F. Sul
Itajaí / Navegantes

Pacific
Link
Rio Grande

Exploited rail network
PIL - Rail Network
(11,000 km) – to be awarded
Structuring Waterways
PAC – Rail network
New railways – Studies
underway

Railways

Figueirópolis
Lucas do Rio
Verde

Salgueiro

Company (EPL)

66

Railway Concession: São Paulo rail beltway (“Ferroanel”) and access to Santos seaport
Object

Demand

The North Ferroanel will
surround the metropolitan
region of São Paulo,
connecting Santos to Jundiaí.
It will increase the rail cargo
capacity and alleviate the
traffic in the city.
Section:
Jundiaí-Manuel Feio; Riberão
Pires-Evangelista de Souza;
access to Santos Seaport

Allows offsetting the transportation of
cargo and passengers from other means of
transporation in the São Paulo Metropolitan
Region and optimizes railway access to Santos
Seaport.

Eng Manoel Feio
Lapa

Suzano
Ipiranga

Canguera
Rio Grande
da Serra

Itaquaciara

To be awarded

Pereque

Evangelista
de Souza

Northern Ferroanel (SP)

Santos
Santos
Seaport

Environmental licensing: State-owned
EPL is responsible for obtaining Previous
License (LP) and will give support for
obtaining the Installation Licence (LI) of
construction works.

Financing Conditions
Term: 30 years
(Grace period: 5 years)
Real leveraged IRR:
up to 16% per year, in real terms.
Upfront payment of revenues due
to operational capacity availability,
in equivalent value of 15% of total
referential CAPEX.
SPE** or holding’s share capital
pension funds).

Railways

Risk Mitigation: Demand Risk
(Guaranteed purchase of 100% of railway
operational capacity availability); Socioenvironmental and Expropriation Risks
(Environmental and Expropriation costs and
charges limited to values pre-established in
concession contracts).

Perus

Amador
Marinque Bueno

Rail infrastructure builder and
manager: Concession for railway
exploitation, comprising: construction,
maintenance, signaling and comunications
systems, and traffic control.
Construction to be completed up to the
5th year of the concession term.

Jundiaí

SP

Concession characteristics
Build, operate and transfer

Ministry
of Finance

currently 5% p.a.
Updated information available
at www.logisticsbrazil.gov.br
Company (EPL)

67

Ministry
of Finance

Railway Concession: from Lucas do Rio Verde (MT)
to Campinorte (GO) and from Palmas (TO) to Anápolis (GO)
Object

Demand

Section: Lucas do Rio Verde
- Campinorte and Palmas Anápolis
Extension: 1,920 km

Interconnects Brazil’s Midwest Region to the
Southeast and Northeast, providing railway
transportation to production centers located
in the midwest and the outflow through the
North-South Railway.

Estimated CAPEX: US$ 3.65 billion
maintenance, signaling and comunications
systems, and traffic control.

(Guaranteed purchase of 100% of railway
operational capacity availability); Socioenvironmental and Expropriation Risks
(Environmental and Expropriation costs and
charges limited to values pre-established in
concession contracts).

Palmas

TO
Lucas do Rio Verde

MT

BA
Campinorte
Anápolis

GO

Concession: Lucas do Rio Verde
- Campinorte and Palmas - Anápolis

MG

To be awarded

ES

MS
SP

RJ

construction works.

Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Term: 30 years

currently 5% p.a.
Company (EPL)

68

Ministry
of Finance

Railway Concession: from Açailândia (MA) to Vila do Conde (PA)
Object

Demand

Section: Açailândia Vila do Conde

Interconnects the Midwest Region to
the North and the port of Vila do Conde,
completing the north stretch of the NorthSouth Railway, allowing the production and
outflow of grains, minerals and oil products
through the port of Vila do Conde

Extension: 457 km

maintenance, signaling and
comunications systems, and traffic
control.

(Guaranteed purchase of 100% of
railway operational capacity availability);
Socio-environmental and Expropriation
Risks (Environmental and Expropriation
costs and charges limited to values preestablished in concession contracts).

Belém
Vila do
Conde Port

PA

Itaqui
Port

Açailândia

MA

Carajás

Concession:
Açailândia - Vila do Conde
To be awarded

TO

construction works.

Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Term: 30 years

currently 5% p.a.
Company (EPL)

69

Railway Concession:
Ouro Verde de Goiás (GO) – Estrela D’Oeste (SP) – Panorama (SP) – Dourados (MS)
Object

Demand

Section: Ouro Verde de
Goiás – Dourados

Expands the North-South Railway and
reaches important production centers of
grains.

Extension: 1,339 km

control.


Ouro Verde de Goiás

GO

Goiânia
Campo Grande

Estrela d’Oeste

Andradina

MS
Panorama
Dourados

Concession:
Ouro Verde de Goiás - Dourados
To be awarded

construction works.

Term: 30 years
Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Ministry
of Finance

currently 5% p.a.
Company (EPL)

70

Ministry
of Finance

Railway Concession: from Belo Horizonte (MG) to Candeias (BA)
Object

Demand

Section: Belo Horizonte Candeias

Creates new possibilities for transport of general
cargo between the southeast and northeast
regions, refocusing on the use of railways to the
development of the internal market.

Extension: 1,350 km

control.


Candeias

BA

Salvador
Aratu
Port Salvador
Port

Caetité

GO

Brumado

Ilhéus Port
Belmonte
Port Terminal

Corinto

MG

Concession:
Belo Horizonte - Candeias
To be awarded

Belo
Horizonte

ES
SP

RJ

construction works.

Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Term: 30 years

currently 5% p.a.
Company (EPL)

71

Ministry
of Finance

Railway Concession: from Rio de Janeiro (RJ) to Vila Velha (ES)
Object

Demand

Section: Rio de Janeiro - Vila
Velha

Integrates the port of Rio de Janeiro and its
Terminals to the Ports of Vitória e Tubarão,
creating new logistic possibilities for the
movement of cargo.

Extension: 572 km

control.

ES

MG

Vitória

Tubarão
Port
Vila Velha
Vitória
Port

Ponta UBU
Port Terminal

Campos dos
Goitaguazes

RJ

Barra do Piraí
Duque de Caixias
Port Terminal
Nova
Iguaçú
Rio de Janeiro Port
Niterói Port
Formosa
Beach Rio de
Janeiro

Açu
Port
Terminal

Concession:
Nova Iguaçu - Vila Velha
To be awarded

Macaé
Port Terminal

construction works.

Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Term: 30 years

currently 5% p.a.
Company (EPL)

72

Ministry
of Finance

Railway Concession: from Corinto (MG) to Campos (RJ)
Object

Demand

Section: Anápolis – Corinto
– Campos


Creates new possibilities for the outflow of grains Build, operate and transfer
and minerals from production centers through
main ports.

Extension: 1,706 km

control.

Uruaçu

BA
GO


Brumado
Ilhéus
Port

Bernardo Sião

Anápolis

MG
Corinto

ES
Intendente Câmara

Belo Horizonte

Vitória
Vitória
Port
Campos

SP

RJ

Açu
Port Terminal

Concession:
Uruaçu - Campos
To be awarded

construction works.

Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Term: 30 years

currently 5% p.a.
Company (EPL)

73

Ministry
of Finance

Railway Concession: from Feira de Santana (BA) to Ipojuca (PE)
Object

Demand

Section: Feira de Santana –
Ipojuca
Extension: 893 km


Modernizes the northeastern railway network, Build, operate and transfer
linking the major ports and markets
control.

PB
Salgueiro

BA

PE
SE
Aracajú

AL


Porto de Recife
Recife
Porto de Suape

Maceió
Porto de Maceió

Terminal Portuário
de Atalaia Velha

Concession:
Feira de Santana - Ipojuca
To be awarded

Porto de
Aratu

Salvador
Porto de Salvador

construction works.

Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Term: 30 years

currently 5% p.a.
Company (EPL)

74

Ministry
of Finance

Railway Concession: from Lapa (PR) to Paranaguá (PR)
Object

Demand

Section: Lapa – Paranaguá

Expands and modernizes rail access to the
port of Paranaguá.

Extension: 150 km

control.

Maracaju

MS

Rio de Janeiro
São Paulo

SP

PR

São Sebastião
Port

Curitiba Santos
Port
Eng. Bley
Paranaguá Port
Lapa
Mafra

Cascavel

Chapecó

Campo Alto
do Sul

SC

RS

Rio Grande
Port

Duque de
Caxias Port
Terminal

Itajaí Port
Florianópolis
Imbituba Port
Laguna Port

Porto Alegre
Guaíba
Port Terminal
Pelotas Port


RJ

Panorama

Concession:
Lapa – Paranaguá
To be awarded

construction works.

Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Term: 30 years

currently 5% p.a.
Company (EPL)

75

Ministry
of Finance

Railway Concession: from Maracajú (MS) to Lapa (PR)
Object

Demand

Section: Maracaju – Lapa

Creates new logistics possibilities for the
outflow of grains and other cargo from
production centers through the Port of
Paranaguá.

Extension: 989 km

control.

Maracaju

MS

Rio de Janeiro
São Paulo

SP

PR

São Sebastião
Port

Curitiba Santos
Port
Eng. Bley
Paranaguá Port
Lapa
Mafra

Cascavel

Chapecó

Campo Alto
do Sul

SC

RS

Rio Grande
Port

Duque de
Caxias Port
Terminal

Itajaí Port
Florianópolis
Imbituba Port
Laguna Port

Porto Alegre
Guaíba
Port Terminal
Pelotas Port


RJ

Panorama

Concession:
Lapa – Paranagua
To be awarded

construction works.

Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Term: 30 years

currently 5% p.a.
Company (EPL)

76

Ministry
of Finance

Railway Concession: from Mairinque (SP) to Rio Grande (RS)
Object

Demand

Section: Mairinque – Rio
Grande

Creates new logistics possibilities for the flow
of cargo between Sao Paulo and the South
Region of Brazil, linking production and
consumption centers.

Extension: 1,667 km

control.

Maracaju

MS

São Paulo
Mairinque

PR
Cascavel

SP

Eng. Bley
Mafra

Chapecó

RS

Rio de Janeiro

São
Santos Sebastião
Port
Port
Paranaguá
Port

Itajaí
Campo Alto Port
do Sul
Florianópolis
SC Imbituba Port
Laguna Port
Porto Alegre
Guaíba
Port Terminal
Pelotas Port
Rio Grande
Port


RJ

Panorama

Forno
Port
Duque de
Caxias Port
Terminal

Concession: Mairinque
– Rio Grande
To be awarded

construction works.

Real leveraged IRR:
referential CAPEX.
pension funds).

Railways


Term: 30 years

currently 5% p.a.
Company (EPL)

77

Ministry
of Finance

Railway Concession – High-Speed Train (TAV)
Rio de Janeiro - São Paulo - Campinas 1st Phase
Physical Description

Study in Progress

Section: Rio de Janeiro - São Paulo - Campinas
Extension: 511 km
The High-Speed Train Rio de Janeiro – Campinas will be the first high speed rail service in Brazil. The first phase includes the
concession of the operation and maintenance of the system, supply and assembly of operational (signalling, electrification
and telecommunication) and safety systems, rolling stock and acoustic protection, and technology transfer.

Railways

Galeão

Viracopos
Guarulhos

Rio de Janeiro

Campinas
São Paulo

Company (EPL)

78

Ministry
of Finance

Major Brazilian Ports

Seaports

Macapá
Belém/Miramar/Outeiros
Santarém
Itaqui
Pecém
Manaus/
Vila do
Itacoatiara
Conde
Cabedelo
Suape/Recife
Porto Velho
Maceió
Aratu/Salvador
Porto Sul/Ilhéus
Vitória
Itaguaí/Rio De Janeiro
Santos/São Sebastião
Paranaguá/Antonia
Itajaí/Imbituba/São Francisco do Sul
Porto Alegre
Rio Grande

Company (EPL)

80

Ministry
of Finance

Port Investment Program - Bidding Blocks
Block
Block 1

Block

Block 3

Block 4

31 terminals at: Santos, Outeiro,
Santarém, Belém, Miramar and Vila
do Conde Ports

Ports
44 terminals at: Paranaguá, Antonina, Salvador, Aratu and São Sebastião
Ports
36 terminals at: Cabedelo, Fortaleza, Itaqui, Macapá, Recife and Suape
Ports
28 terminals at: Itaqui, Niterói, Rio
de Janeiro, Itajaí, São Francisco do Sul,
Rio Grande, Porto Alegre and Vitória
Ports

Estimated
Investment

Increase
Capacity

Auction

US$ 1.5 bi

27 million
tons/year

Dec 2013

Public Consultation

Auction

Sep 2013

Jan 2014

Oct 2013

Feb 2014

Nov 2013

Mar 2014

Seaports

Block 2

Ports

Source: Special Secretariat of Ports
81

Ministry
of Finance

Port Investment Program
Conditions to public ports

Seaports

• Terminals at public ports will be leased through public auction
Main Features
Contractual Terms (requirements)
• 25-year term, renewable only once
• Minimutm Investments
Standardized biddings conducted through
• Minimum productivity
auction by ANTAQ
• Minimum static capacity
Selection Criteria
Terminal in verticalized chains or with
Terminals with features of provision of
healthy competition environment
services to third parties
• Bidding for greater handling capacity
• Bidding for lowest tariff
• Induction of new investments
• Reduction of port costs
• Guarantee of isonomic access to users

Conditions to private ports
•

Terminals at private ports may be leased without a public auction, should its construction not conflict
with another port or terminal, existing or planed. There are 62 private terminals that should obtain
its lease in the next months, with a estimated investment of US$ 7.5 billion

Company (EPL)

82

Ministry
of Finance

Major Brazilian Airports
Concessions already
granted :
Guarulhos (São Paulo)
Viracopos (São Paulo)
Brasília

Boa Vista

Macapá
Belém (Val de Cans)
Santarém

Manaus

Parnaíba

Tefé

Belém (Júlio César)
Altamira

Tabatinga

Marabá

Carajás
Rio Branco

João Pessoa

Campina
Petrolina Grande

Palmas

Porto Velho

Natal

Juazeiro
do Norte

Imperatriz

Cruzeiro do Sul

Fortaleza

Teresina

Paulo
Afonso

Recife
Maceió

Salvador
Brasília

Cuiabá

Concessions to be granted :
Galeão (Rio de Janeiro)
Confins (Belo Horizonte)

Ilhéus

Airports

Aracajú

Montes Claros

Goiânia

Confins
Corumbá

Campo Grande

Uberaba
CampinasBH (Carlos Prates)

Passengers per year
Ponta Porã
15.000.001 to 30.100.000 (3)

5.000.001 to 15.000.000 (9)

Londrina

Up to 100.000 (13)

RJ (Galeão)
RJ (Jacarepaguá)
RJ Santos Dumont
SJ dos Campos
Guarulhos
SP (Congonhas)
Navegantes
Florianópolis

Uruguaiana

100.001 to 500.000 (19)

Vitória
Campos dos Goytacazes
Macaé

SP (Campos de Marte)
Curitiba (Afonso Pena)
Curitiba
(baracher)
Foz do Iguaçú
Joinville

1.000.001 to 5.000.000 (15)
5000.001 to 1.000.000 (7)

BH (Pampulha)

Uberlândia

Criciúma

Bagé

Porto Alegre
Pelotas

Source: Civil Aviation Secretariat (SAC)

84

Ministry
of Finance

Airport Investment Program
Domestic
Pax - 2012

Estimated
Investment

Auction

Concession
Term

Situation

Guarulhos
International
(GRU)

11,387,443

20,958,079

US$ 3.1 billion

Feb 2012

20 years

Granted

Viracopos
International
(VCP)

75,610

8,627,690

US$ 5.1 billion

Feb 2012

30 years

Granted

Brasilia
International
(BSB)

409,975

15,419,553

US$ 1.8 billion

Feb 2012

25 years

Granted

Galeão
International
(GIG)

4,190,433

12,973,780

US$ 2.45 billion Nov 2013

25 years

To be
Granted

Confins
International
(CNF)

443,955

9,834,536

US$ 1.52 billion Nov 2013

30 years

To be
Granted

Airports

International
Pax - 2012

Airport

85

Ministry
of Finance

Schedule for the concessions of Galeão and Confins airports

Studies

TCU* and
Public Hearings

Release of
Auction
Notices Auction

May
Jun
Jul
Aug
Sep
Nov

Airports

2013

* TCU- Federal Court of Auditors
86

Ministry
of Finance

Galeão - Summary Chart
Galeão - Summary Chart
Number of Passengers, in million
18

12
2011-2012: 17.5%
6

Average Growth = 16%

Airports

12

11

20

10

20

09

20

08

20

20

06

07
20

05

20

20

03

20

04

0
20

Airport Area: 17,881,697m²
Area for Apron: 712,895 m2
Aircraft Capacity:
- T1: 19 boarding gates + 12 remote positions
- T2: 19 boarding gates + 12 remote positions
- 15 positions for cargo aircraft
Passenger Terminals:
Capacity: 17.4 million Pass/Yr
Area: T1 - 147,834 m²

T2 - 132,847 m²
Parking: 4,310 parking spaces
Cargo Terminal: 46,500 m²
Cargo Movements: 87,876 ton
Staff Employees: 958

Passenger Profile (2012), in million
Dom

Int

13.0
4.2
87

Ministry
of Finance

Galeão – Financial Conditions
Object:
•

Expansion, maintenance and operation of the Antônio Carlos Jobim International Airport
(Galeão Airport) with a total area of 17,880,000 m2

Contract criteria:
•
•

Financing conditions*:
•
•
•
•

Credit term: 14 years
Grace period: 2 years
Debt: up to 80% of the capex
Interest Rate: TJLP (currently at 5%) + 0.9% + risk spread (0.46% to 3.57%) per year

Airports

•
•
•
•
•
•
•

Term: 25 years
Consortium: INFRAERO, the government owned company, will hold 49% of the Concessionaire capital;
private leveraged (51%)
Periodic review of the capex program and Investment triggers
Bidding Criteria: highest bid + variable fee
Minimum bid: US$ 2.09 billion
Variable fee: 5% of the gross revenue
CAPEX: US$ 2.45 billion
Project IRR: 6.63% p.a.

*BNDES financing conditions applied
to airports already granted (Guarulhos,
Viracopos and Brasília).
88

Ministry
of Finance

Galeão- Estimated Demand
Year

2013

2033

2038

19,269,199

Passengers

2023
34,537,602

50,138,243

60,365,874

70

50

Airports

Million Passengers

60.3

50.1

34.5

30

19.2
10

2013

2023

2033

2038


89

Ministry
of Finance

Confins - Summary Chart
Confins - Summary Chart

8
2011-2012: 9.5%
Migration of
Pampulha to
4
Confins

Staff Employees: 344

12

11

20

10

20

09

20

08

20

20

06

20

05

20

04

20

03

20

07

Average Growth = 46.3%

0

Passenger Profile (2012) , in million

Vehicle Parking : 2,005 parking spaces
Cargo Terminal: 9,880 m²
Cargo Movements: 27,163 ton

Airports

Passenger Terminal:
Capacity: 10.3 million Pass/Year
Area: T1 - 60,305 m²

Number of Passengers, in million

12

20

Airport Area: 15,010,000 m²
Area for Apron: 211,437 m2
Aircraft Capacity:
Apron 1: 9 boarding gates + 9 remote positions
Apron 2: 7 positions for general aviation + 1 helipad
Apron 3: 2-4 positions for general aviation

Dom

Int

9.8
0.4
90

Ministry
of Finance

Cofins - Financial Conditions
Object:
•

Expansion, maintenance and operation of the Tancredo Neves International Airport
(Confins Airport) with a total area of 15,010,000 m2

Contract criteria:
•
•

Financing conditions*:
•
•
•
•

Credit term: 14 years
Grace period: 2 years
Debt: up to 80% of the capex
Interest Rate: TJLP (currently at 5%) + 0.9% + risk spread (0.46% to 3.57%) per year

Airports

•
•
•
•
•
•
•

Term: 30 years
Consortium: INFRAERO, the government owned company, will hold 49% of the Concessionaire
capital; private leveraged (51%)
Periodic review of the capex program and Investment triggers
Bidding Criteria: highest bid + variable fee
Minimum bid: US$ 476.5 million
Variable fee: 5% of the gross revenue
CAPEX: US$ 1.52 billion
Project IRR: 6.63% p.a.

*BNDES financing conditions applied
to airports already granted (Guarulhos,
Viracopos and Brasília)
91

Ministry
of Finance

Confins – Estimated Demand
Year

2013

2033

2043

10,993,890

Passengers

2023
18,162,209

28,165,165

43,334,690

50
43.3
Airports

Million Passengers

41
32
28.1
23
18.1

14
5

10.9

2013

2023

2033

2043


92

Ministry
of Finance

11th Round – Bidding Results (May 2013)
• 142 bought blocks, from 289 offered at the auction
• US$ 1.22 billion in signature bonus
• US$ 3.0 billion in the Minimum Exploratory Program commitment
• Local Content offers indicates good possibilities for execution of the previous
commitments regarding earlier bidding rounds
• 30 companies bought blocks at the bidding round
- 18 companies from 11 different countries

Oil and Gas

Source: National Agency of Petroleum,
Natural Gas and Biofuels (ANP) and
Ministry of Mines and Energy (MME)

94

Ministry
of Finance

11th Round – Bidding Result (May 2013)
Amazonas River Mouth

Potiguar Onshore
Basin

Pará-Maranhão

Sedimentary Basin

Barreirinhas
Ceará
Potiguar Offshore

Brought Blocks
Offered but not sold
Offshore
Pre-Salt Limit

Parnaíba

Oil and Gas

Pernambuco-Paraíba
Tucano and
Reconcavo Basins

Espírito Santo
Onshore/Offshore

Brasília
95

Ministry
of Finance

11th Round – Bidding Result (May 2013)
Sedimentary basin
Sergipe-Alagoas onshore
Foz do Amazonas
Pernambuco-Paraíba

Potiguar offshore
Potiguar onshore
Barreirinhas
Pará-Maranhão
Parnaíba (onshore)
TOTAL

Bought Blocks
11
14
1
3
21
6
6
15
6
3
1
14
19
2
0
14
6
142

Area (km2)
320.89
10,543.55
476.95
1,776.23
3,789.67
4,328.40
178.73
443.13
3,642.32
2,303.23
767.38
411.80
9,997.40
1,538.57
42,143.81
17,620.43
100,282.49

Oil and Gas

Tucano Sul
Espírito Santo offshore
Espírito Santo onshore
Recôncavo
Ceará

State
AL
AP
PB
PE
BA
ES
ES
BA
CE
CE
RN
RN
MA
MA
PA
PI
MA
11

96

Ministry
of Finance

1st Round of production sharing – Pre-Salt layer
Date: October 21, 2013
Area name: Libra
• 1,548 sq km
• Deep water of Santos Basin
• Well with tested oil discovery
• Estimative of 42 billion bbl of oil in situ, indicating recovery of 8 to 12 billion barrels
Signature Bonus: R$ 15 billion (~US$ 6.5 billion)

2013

Contract
Signature

Dec

Auction

Oct 21st

Sep

Jul

Preliminary
auction
notice,
Release
areas
of auction
and data
notice

Oil and Gas

Judgement criteria: Percentage of profit oil for the Government
(minimum of 40% in average along the contract period)
Local Content
• 37% at Exploratory Phase
• From 55% to 65% at Production Development Phase


97

Ministry
of Finance

Brazil Pre-Salt layer – Bidding under production sharing regime
Espirito Santo

Granted area: 42 thousand sq km (28%)
Cession area: 3.74 thousand sq km (2,5%)

Estimated Volumes (06/2013)
28.5 to 39.1 billion boe

Rio de Janeiro

Proved Reserves
(2012): 18.2 bi boe

São Paulo

Franco
2.0 to 5.5 bi boe

Libra
8 to 12 bi boe

Pão de Açúcar
1.2 bi boe

Iara
3 to 4 bi boe

Sapinhoá
2.1 bi boe

South and NE of Tupi
0.5 to 0.7 bi boe
Peroba
1.1 to 1.8 bi boe

Lula
8.3 bi boe

Oil and Gas

Iara Surroundings
0.6 to 0.8 bi boe

Florim
0.1 to 0.4 bi boe

Sul de Guará
0.1 to 0.3 bi boe

Parque das Baleias
1.5 to 2 bi boe

Pre-Salt
Boundaries
Estimated Recoverable
Volumes

• At the Pre-Salt evaluated areas, expected recoverable volumes could reach twice the
actual proved reserves


98

Ministry
of Finance

12Th Bidding Round: auction scheduled for November, 2013
Concession of areas under rules and terms established by Law 9,478/1997
Focus on natural gas – conventional and unconventional resources
Blocks: 240
• 164,500 km²
• 7 Sedimentary Basins

• Signature Bonus (40%) - Minimum for each block in the Auction Notice
• Minimum Exploratory Program (40%)
• Local Content (20%) - Minimum and maximum values in Auction Notice


Oil and Gas

Bidding judgment criteria:

99

Ministry
of Finance

Areas with potential for non-conventional resources
Tacutu

Amazonas River Mouth
Pará-Maranhão
Barreirinhas

Solimões

Amazonas

Potiguar
Parnaíba

Acre

Rio do Peixe
Pernambuco-Paraíba

Alto Tapajós
Madre de Dios
Bananal

Oil and Gas

Parecis

Sergipe-Alagoas
Tucano
Recôncavo
Camamu-Almada

São
Francisco

Pantanal
Espírito Santo
Paraná

Campos
Santos

Oil and Gas in Brazil

Sedimentary Basin

100

Brazilian investments in the electricity sector auctions – 2013 to 2017
Estimated Expansion

Investments (US$ billion)

33,288 MW
21,164 km

53.1
11.0
64.1

Power
Transmission
Total

• Power to be contracted
Sources

Investment (US$ billion)

21,689

35.4

10,099

16.4

1,500
33,288

1.3
53.1

• Electricity transmission lines
Auction

Total

Investment (US$ billion)*

2013
2014-2017

Length (Km)
4,745
11,846
4,573
21,164

2.4
6.0
2.6
11.0

Approved Projects
Other Projects

Electricity

Hydro
Other Renewable Sources
(Wind, Biomass and Small Hydro)
Thermal
Total

Capacity (MW)

* Including estimated investment in
substations
Source: Energy Research Office (EPE)

102
Ministry
of Finance

Electricity Auctions
• Modalities
• New Energy Auctions A-3 and A-5: servicing expected demand growth
• Reserve auctions: ensuring greater security of supply
• Structuring Project Auctions: special conditions

Electricity

• Bidders
• Public or private companies
• National or foreign companies
• Winners
• Lowest bid
• Winners of the new energy auctions sign long-term contracts (15 to 30 years) with distributors and
receive concessions (in the case of hydropower plants)
• Indexation
• IPCA (Consumer Price Index)
• Financing
• Use of the PPA (Power Purchase Agreement) as collateral for project financing by the BNDES
• Risk mitigation
• Only projects with prior environmental licenses are auctioned off

103
Ministry
of Finance

Main technical requirements for participation in the electricity auctions
• A project’s technical and environmental viability must be ensured to participate in the electricity auction
• Several requirements must be met to prove viability, such as:
Prior
Environmental
License

Access
Information

Wind Power
Plant

X

X

X

Hydroelectric
Plant (HPP and
small Hydro)

X

X

X

Thermoelectric
Plant (Biomass
and fossil)

X

X

X

Energy
Proof of
Production Right of Local
Certification
Use
X

Proof of
Availability

Water
Use Grant

X
Electricity

ANEEL
Registry

Type

X

X

X

X

HPP - Hydro Power Plant
ANEEL -National Electricity Agency

104
Ministry
of Finance

Main financial requirements for
participating in electricity auctions and for signing power contracts
• Bid guarantees due to ANEEL
• For each project eligible to participate in the auction, bidders must submit bid guarantees due to ANEEL
1. For Projects without grants: 1% of the investment value
2. For Projects with grants: US$ 870 per lot of energy to be offered
(1 lot = 0.1 average MW)
• Assurance of Faithful Execution of Contract
• The auction winners must collect 5% of the investment value declared to the EPE
• The warranties will decrease in value as the construction phase of the power plant advances

Average MW (MWm) – Energy Unit
(8,760 MWh over an yearly period)
Electricity
105
Ministry
of Finance

BNDES FINEM (Financing to Enterprises) Financial Aspects
Hydro Power Plant
(HPP)

Thermal Power Plant
(TPP)

Wind, Biomass and
Small Hydro

* DSCR: debt service coverage ratio
** TJLP: Long Term Interest
Tax, currently 5.0%
Source: National Bank of Economic
and Social Development (BNDES) –
Consultation in Jan/2013

Electricity

• Current credit conditions:
• Leverage: up to 80%, should
• Leverage: up to 70% (60% coal),
• Leverage: up to 70%;
observe DSCR * ≥1.2;
should observe DSCR* ≥ 1.2;
• Amortization period: up to 20
• Amortization period up to 20 years
• Amortization period: up to 16 years;
years;
(16 years for wind);
• Grace period: up to 6 months after
commercial operation date;
• Interest rate: TJLP**+0.9% +credit
• Interest rate: TJLP**+0.9%+credit
• Interest rate: TJLP**+0.9%+credit
risk spread.
risk spread.
risk spread.

106
Ministry
of Finance

Electricity Auctions: main results
• Consolidated results of new energy auctions from 2005 to 2012
Number of Auctions

Projects

Capacity (MW)

Investment (US$ billion)

23

490

60,892

100

• August 2013 Reserve Auction
Projects able to bid

Auction Results

Bid Capacity
(MW)

Number of
Participants

Bid Capacity (MW)

Number of
Participants

Total Amount
(US$ million)

Wind Power Plant

8,999

377

1,505

66

2,373

Electricity

Type

• August 2013 Power Auction
Type
Biomass
Coal
HPP (less than 50 MW)
HPP SINOP
Total

Bid Capacity
(MW)
919
1,840
376
400
3,535

Number of
Participants
16
3
16
1
36

Auction Results
Bid Capacity
(MW)
647
219
400
1,266

Number of Total Amount
Participants (US$ million)
9
815
9
586
1
773
19
2,174


107
Ministry
of Finance

Hydropower Expansion: 2013 electricity auctions
• November 2013 Auction
Type

Bid Capacity (MW)

Number of Participants

Wind Power
Plant

15,042

629

Solar

2,838

119

Small Hydro

295

16

Biogas

39

2

Biomass

504

15

469

2

19,187

783

Electricity

Natural Gas
Total

• Hydropower Expansion: December 2013 auction

2013

Hydropower
Plant

River/State

Capacity
(MW)

São Manoel

Auction

Teles Pires/ MT-PA
Parnaíba/ PI

63

Ribeiro Gonçalves

Parnaíba/ PI

113

Itaocara

Paraíba do Sul/RJ

145

Estimated Investments
(US$ billion, constant
prices, Dec/2012)

700

Cachoeira

Total Capacity
(MW)

1,021

1.8

108
Ministry
of Finance

Hydropower Expansion: auctions from 2014 to 2017

2017

Paranaíba/ MG-GO

74

Piquiri/ PR

93.2

Ercilândia
S Luíz Tapajós
Água Limpa
Comissário
Foz Piquiri
Telêmaco Borba
Paranhos
Tabajara
Jatobá
Castanheira
Itapiranga
Torixoréu
Bem Querer
Riacho Seco

Piquiri/ PR
Tapajós/ PA
Das mortes/ MT
Piquiri/ PR
Piquiri/ PR
Tibagi/ PR
Chopim/PR
Ji-Paraná/RO
Tapajós/PA
Arinos/ MT
Uruguai/SC-RS
Araguaia/ GO-MT
Branco/ RR
S. Francisco / PE-BA

87.1
6,133
380
105
101
109
63
350
2,336
192
721
408
709
276

Juruena/ MT-AM

1,461

S. Simão
Pompeu
Marabá
Prainha

Alto Juruena/
MT-AM
S. Francisco / MG
Tocantins / PA-MA
Aripuanã/ AM

Total Capacity
(MW)

Estimated Investments
(US$ billion, constant prices, Dec/2012)

7,495

11.3

3,249

5.4

1,117

2.3

3,509

8,407

13.7

209
2,160
792
Total

20,268

32.7

Electricity

2016

Capacity
(MW)

Salto Augusto Baixo

2015

River/State

Foz do Piquiri

2014

Hydropower
Plant
Davinópolis

Auction


109
Ministry
of Finance

HPP São Manoel - Fact sheet

Estimated Investment
US$ 1.0 billion

Indigenous Land Cayabi
HPP São Manoel

0

2,5 5

10

15

Electricity

• Teles Pires River
MATO GROSSO
• Capacity: 700 MW
Legend
• Firm Energy: 400 average MW
HPP São Manoel
• Number of generating units: 5
Novo Planeta
HPP São Manoel Reservoir
Declared Indigenous Land
• Gross Head: 23.9 m
Paulão
State border line
• Spillway Crest: 165 m.
Mutum
0 2,5 5
• Max normal water level (reservoir): 161 m
• Normal water level downstream: 138.2 m
• Reservoir Area (normal water levels) ~ 70.8 km²

PARÁ

20

N
10

15

20


110
Ministry
of Finance

The development of wind power in Brazil
• Operating and contracted capacity
10,130

10000
8,846
7,882

MW

8000
6000

5,197

4000

17
20

16
20

15

14

20

20

13

2,189

20

12

1,750

20

11

1,417

20

10

09

20

08

607

20

07

337

20

248

20

06

05

04

237

20

29

23

20

20

03

22

20

0

927

Electricity

2000

• To be contracted in 2013-2017 auctions

Capacity
(MW)

Investment
(US$ billion)

4,215

7.7

111
Ministry
of Finance

The development of bioelectricity in Brazil
• Operating and contracted capacity
10,000

8,936 9,035 9,035 9,085 9,185
7,874 8,081

8,000

MW

6,822
6,000

4,969
3,910

4,000

2,584 2,590
2,000

1,755

Electricity

17
20

16
20

15
20

14
20

13
20

12
20

11
20

10
20

09
20

08
20

07
20

06
20

20

05

0

• To be contracted in 2013-2017 auctions

Capacity
(MW)

Investment
(US$ billion)

2,513

2.4

112
Ministry
of Finance

Other energy sources to be contracted in 2013 – 2017 auctions
• Small hydropower plants
Capacity
(MW)

Investment
(US$ billion)

1,000

2.6

Capacity
(MW)

Investment
(US$ billion)

1,500

1.3

Electricity

• Thermal power stations

• Additional expansions depend on the effective exploration of unconventional gas


113
Ministry
of Finance

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