Etav will have power of veto at SPE

Empresa de Transporte Ferroviário de Alta Velocidade – Etav (High Speed Railway Transport Company), state-owned company to be created by the Brazilian government to be partner on the speed train connecting São Paulo, Campinas and Rio de Janeiro, will have power of veto for some issues in the Sociedade de Propósito Específico – SPE (Specific Purpose Partnership), comprised of the bid winners. The expected share of Etav in SPE is of 33%.

According to the CEO of the Agência Nacional de Transportes Terrestres – ANTT (National Land Transports Agency), Bernardo Figueiredo, the veto does not mean that Etav will have powers in the SPE management. The veto is only for issues that preserve the purpose of SPE, which is to build and operate the speed train. According to him, the veto will be valid, for example, for eventual attempts of changing focus, such as opening parallel businesses.

Yesterday, the government launched the notice to bid for the speed train auction, which will cost US$ 18.6 billion. From this total, US$ 5.6 billion will be from the partners’ own capital. The remaining sum will come from financing from the Banco Nacional de Desenvolvimento Econômico e Social – BNDES (National Bank for Social and Economic Development) and other international fostering banks.

The envelopes with offers from the parties interested on the bid shall be delivered on November 29th, and their opening, that is, the auction per se, will occur on December 16th, at Bovespa. The winner will be the one who charges the lowest fee from the users.

Capitalization. Etav will have a capital of US$ 1.9 billion. The capitalization will occur through two processes: a total of US$ 641 million will be integrated directly by the National Treasury; and another US$ 1.27 billion will be paid by the government for misappropriating real estate necessary to the project implementation.

For Figueiredo, such estimate for misappropriations takes into account the reference outline approved by the agency, but if the value exceeds this sum, the government will pay the difference, and the additional value will not be used for capitalizing the company. The SPE to be formed by the auction winners will have a period of up to eight years, counted from the beginning of the service operation, to open the company’s capital. The state-owned company Etav, which will be partner to SPE, may also attract private investors.

According to the law project forwarded by the government to the Congress to create the company, it is expected that the government may have 50% plus one share of the company. Bernardo Figueiredo said that this configuration (50% plus one) ensures the State’s control over Etav, but opens the possibility for it to look for partners for financing itself.

Figueiredo highlighted that it is actually possible for the works to be concluded before the Olympic Games, but that this depends on the investor. The obligation included in contract is that the line is ready in, at most, six years. Thus, since the estimate is for the construction works to begin until late 2011, the enterpriser’s obligation is to deliver the speed train until 2017, after the Olympic Games.

Concerning the 2014 World Cup, Figueiredo reinforced that a few stretches (such as the one connecting Campinas to São Paulo) may be ready before the World Cup.

Public expenses

US$ 641 million is how much will be paid directly by the National Treasury to compose the capital of Etav

US$ 1.27 bi is how much the government will pay for misappropriating real estate