Formula against “Valec risk” can unlock concessions

To circumvent the resistance of the private sector to railways concessions, the government finishes a model in which the resources to fund a possible Valec default will be out of the company and accessible to investors. The state company was responsible for acquiring all the transport capacity from privatized railways. The fear of private investors is that over the 35-year concession the government will not put enough money in the budget for the company to honor these commitments.

The idea is that the government will create a guarantee through US$ 6,26 billion in government bonds issued by the National Treasury to Valec. These papers would be guarded by financial institutions that act as trustees. By this mechanism, governed by private contracts between Valec and banks, railroads dealerships could directly access the resources in the event of default by the federal government.

The aim is also to increase the interest rate on finance leases from 1% per year, as announced by the government, to 1.5% plus the change in long range interest rate (TJLP). Federal banks argued that 1% per year would not be sufficient to cover the risks of the operation. Other details are still under discussion. Guarantees equivalent to US$ 6,26 billion in government bonds, for example, do not please the private sector, who prefers to have specific values for each concession.

The image uses by an authority in an interview with Valor is one of a trust, instrument that will guarantee the dealership access to resources, but still maintaining the ownership to Valec. It is a way to make the state company does not reduce its capital and public debt statistics do not reflect a loss of equity.
In the railways concession of model, construction and operation of the sections are made by the private sector, but the sale of the right of transport is made by Valec, who commits to resell it to interested parties. The problem is that the private sector does not want to take that Valec risk. The US$ 6,26 billion fund would solve the problem. The papers would not be placed all at once, but as the concessions leave the paper.

The government has great concern at this moment of decision by the TCU to reduce planned investments in the stretch Lucas do Rio Verde (MT)-Campinorte (GO), from US$ 2,67 billion to US$ 2 billion. It is understood that this undermines the concession. The Ministry of Transport asked TCU to reconsider the matter and, meanwhile, the process of granting the railroads remains in halt. The government’s intention is to bid at least two segments in 2014: Lucas do Rio Verde-Campinorte and Açailândia (MA)-Bracarena (PA).