See which are the investments announced by the government

With a forecast of R$ 198,4 billion in investments during the next four years, the federal government announced this Tuesday (9) the new phase of the Program of Investment in Logistics (PIL), that it is going to privatize airports, highways, railroads and ports. Of that total, R$ 69,2 billion must be invested between 2015 and 2018, during the current mandate of President Dilma Rousseff.

The package of investments is  another attempt by the president to modernize part of the country’s infrastructure. This new version of the PIL also is a reaction of Dilma to the fall of its popularity provoked for the deceleration of the economy and the denunciations of corruption in Petrobra’s.

In the first phase of the PIL, announced in August of 2012, it forecasts investments of R$ 133 billion only in highways and railroads. However,  of the nine stretches of roads, only six were auctioned. None of the railroad projects left the paper.

In this new phase of the program, the government made changes to attract investors and to reduce the possibilities of new frustrations. Among them there is the possibility of concession by means of grant, where it is successful who pays the biggest bonuses to the government for the right to explore a service. This model was adopted during the government of ex-president Fernando Henrique Cardoso (PSDB) and it was then criticized by the PT.

“With one better infrastructure, we go to be able to take care of the farming industry better, we will be able more quickly to drain the production of Brazil. The reduction of the costs will very benefit to industry, reducing import costs and export, promoting bigger integration enters the global chains of values. Also, we are going to take care of to the increase of the volume of trips within Brazil, providing better services”, said the minister of the Planning, Nelson Barbosa, during the announcement of the package.
 
UNDERSTAND IT:

– The plan announced by the government foresees that the companies who win the concessions will invest R$ 198,4 billion in the infrastructure works of the country
– These resources will be invested in the construction and remodeling of the highways, railroads, ports and airports under concession
– Of this value, R$ 69.25 billion will have to be invested between 2015 and 2018
– The other R$ 129.2 billion will be invested from 2019 and until the end of the concession deadline,  varies According to the work, being able to get to 30 years
– It was not defined which is the model that will be adopted for each concession. Therefore, it does not have an estimate of how much the government is going to collect with the auctions

THE CONCESSIONS:

Highways

Of the R$ 198,4 billion, R$ 66.1 billion must be applied in the modernization (duplication and improvements) of federal highways. The government foresees the auction of 15 lots of roads, totaling 6,974 kilometers.

Among the stretches are BRs-476/153/282/480, between Parana and São Paulo; BR-163, between Mato Grosso and Para; BRs-364/060, between Mato Grosso and Goiás; BR-364, between Goiás and Minas Gerais. The government estimates that it is still to auction them in 2015.

For 2016, 11 other stretches of federal highways will be procured in 10 states (Rondônia,Mato Grosso, South Mato Grosso, Rio Grande Do Sul, Santa Catarina, São Paulo, Minas Gerais, Espirito Santo, Bahia and Pernambuco).

In the first version of the PIL, the winner of the road auction  was the group that offered the lowest toll value. Moreover, it had the obligation of duplication of the stretches in 5 years, with the start of the tariff collection  only after the conclusion of 10% of the works.

The model of lesser toll must remain. However, the minister of Transports, Antonio Carlos Rodrigues, said he has not defined yet if the obligation of duplication in five years will be kept.

“It does not have obligation of 5 years [to finish the duplications]. It is in the study phase and after it will find out how it is going to be run”, said Rodrigues.

Highway in PE
BR-101/232/PE
Total extension: 564 km
Estimated investment: R$ 4.2 billion
Aim: construction of the Metropolitan Arc of Recife, improvement of the access to Porto de Suape, and duplication for Northeast Cruise
Highway in the BA

BR-101/BA
Total extension: 199 km
Estimated investment: R$ 1,6 billion
Goal: to duplicate stretch Feira de Santana/Gandu and to improve the freight transportation between Northeast and Southeast
Highway in MG

BR-262/381/MG
Total extension: 305 km
Estimated investment: R$ 1.9 billion
Goal: to duplicate stretch Belo Horizonte/Divisa ES and to improve the security and to reduce costs
Highway in the RJ/SP

BR-101/493/465/RJ/SP
Total extension: 357 km
Estimated investment: R$ 3.1 billion
Goal: increase capacity of the Rio-Santos stretch  up to Ubatuba, way of tourism, with the concession of the Metropolitan Arc of Rio de Janeiro
Highway in SC

BR-470/282/SC
Total extension: 455 km
Estimated investment: R$ 3.2 billion
Goal: to duplicate stretch that links to the agro-industrial region of SC to the ports in the Arc South
Highway in SC

BR-280/SC
Total extension: 307 km
Estimated investment: R$ 2.1 billion
Goal: to improve draining of the harvest and industrial production of the SC for the ports in the Arc South
Highway in SC

BR-101/SC
Total extension: 220 km
Estimated investment: R$ 1.1 billion
Goal: to extend the capacity and to improve track safety
Highway in RS

BR-101/116/290/386/RS
Total extension: 581 km
Estimated investment: R$ 3.2 billion
Goal: to duplicate Production Highway to Carazinho, to duplicate stretch Porto Alegre to Camaquãe quality on the Freeway
Highway in MS

BR-267/MS
Total extension: 249 km
Estimated investment: R$ 2 billion
Goal: to duplicate connection MS/Divisa SP and to reduce costs for the draining of the farming production to the ports in the Arc South
Highway in MS
BR-262/MS
Total extension: 327 km
Estimated investment: R$ 2.5 billion
Goal: to duplicate Campo Grande connection/ Divisa SP and to reduce costs for the draining of the farming production for the ports in the Arc South
Highway in RO/MT

BR-364/RO/MT
Total extension: 806 km
Estimated investment: R$ 6.3 billion
Goal: to improve the integration of the producing regions of grains of TO and RO to the waterway of Rio Madeira
New investments in existing concessions:
R$ 15.3 billion (2 projects in progress and 9 in evaluation)

In evaluation:
BR-163/MT – duplication R$ 0.8 billion
BR-153/SP – duplication R$ 4 billion
BR-116/PR/SC – duplication R$ 2.5 billion
BR-381/SP/MG – additional band R$ 0.6billions
BR-324/116/BA – additional band R$ 0.4billions
BR-393/RJ – duplication R$ 1.3 billion
BR-101/RJ – duplication R$ 1.2 billion
BR-116/SP/RJ – Dutra Serra of Araras,Marginais – R$ 2.3 billion
BR-101/376/116/SC/PR additional band – R$0.9 billions
In progress:
BR-290/RS – Freeway additional band – R$ 0.2billion
BR-040/RJ – Ascent of Mountain range R$ 1.1billion.

Airports

Also the delivery to the private initiative the airports of Porto Alegre, Salvador was confirmed, Fortaleza and Florianópolis. The government estimate  is that they receive, in the total, R$ 8.5 billion in investments.  The auctions are expected to happen in the first quarter of 2016.

The reduction in the participation of the state Infraero in the new concessions, given as certain, went back to be questionable. In the auctions of the airports of Guarulhos, Campinas (SP), Brasilia, Confins (MG) and Santos Dumont, Infraero stayed with 49%. Now, the expectation was that it fell 15%.
According to the minister of the Secretariat of Civil Aviation (SAC), Eliseu Padilha, now the government can opt to a percentage of different participation, depending on the airport. This still is under analysis.

“It can vary [the participation of the Infraero]. It is not pacific yet.  Inside the government we have  two streams: one that wants to keep 49% and another one that thinks about 15%, which is the minimum. It has already been thought about the Golden Share clause [which gives the shareholder the veto power], that was abandoned”, Padilha said.

The minister informed that the current concessionaires of airports will be able to participate in the new auctions. According to him, however, a performance spectrum will be established that will hinder that a same company administers two terminals very close.

Also the grant of seven regional airports will be made: Araras, Jundiaí, Bragança Paulista, Itanhaém, Ubatuba and Campinas (Amarais), all in São Paulo, besides Caldas Novas, a tour pole in Goiás. In these terminals, the expected investment is of R$ 78 million.
 
FORTALEZA INTERNATIONAL AIRPORT Pinto Martins
12th Busiest Airport in the country and 3rd in the Northeast region
Movement of passengers in 2014: 6.5 million
Main investment: increase of the patio and terminal of passengers
Expected investments: R$ 1.8 billion

SALVADOR INTERNATIONAL AIRPORT
8th busiest airport in the country and 1st in the Northeast region
Movement of passengers in 2014: 9.2 million
Main investment: increase of the terminal of passengers and construction of 2nd track
Expected investments: R$ 3 billion

FLORIANOPOLIS INTERNATIONAL AIRPORT Hercílio Luz
14th Busiest Airport in the country and 3rd in the South region
Movement of passengers in 2014: 3.6 million
Main investment: new terminal of passengers and patio
Expected investments: R$ 1.1 billion

PORTO ALEGRE INTERNATIONAL AIRPORT Salgado Filho
9th Busiest Airport in the country and 1st in the South region
Movement of passengers in 2014: 8.4 million
Main investment: increase of track, patio and passengers terminal
Forecast of investments: R$ 2.5 billion
Consent for concession of 7 designated regional airports:
Airport of Bragança Paulista/SP
Airport of Campinas – Amarais/SP
Airport of Itanhaém/SP
Airport of Jundiaí/SP
Airport of Ubatuba/SP
Airport of Araras/SP
Airport of Caldas Novas/GO
 
Railroads

The government also foresees investments of R$ 86.4 billion in railroads. It enters the enclosed stretches in the program of the Railroad the North-South, between Palmas (TO) and Anápolis (GO) and between Barcarena (Para) and Açailândia (MA) and between Anápolis, Estrela d’Oeste (SP)and Três Lagoas (MS).

Also investments in the stretch between Lucas do Rio Verde (TM) and Miritituba are foreseen (Para) and the construction of a railroad between Rio de Janeiro and Vitória (ES). The government also projects investments of R$ 40 billion in the so-called Bi-oceanic, that it intends to interconnect the Midwest and the North of the country to Peru, aiming at exports to China.

In the first phase of the PIL, announced in 2012, the government had announced the construction of 10 thousand kilometers of new railroads, but no stretch got to leave the paper until today.

To try to revert this situation, was announced a change in the concession model. In 2012, it foresaw that the winners of the auctions would construct and make the maintenance of the tracks, but the capacity of freight transportation would be all bought by the state VALEC. After that, VALEC would sell the right of ticket to all the interested transporters.

This model aimed at to avoid monopoly and the competition in the load transport for railroads, benefiting the Brazilian producers. However, the damage risk, due to interested transporters, stayed all with the government.

For this new phase of the PIL, the government will have three options for the model of railroad concession: highest value of grant (it is successful who offers to the government the highest bid for the exploration right); lowest tariff and sharing of investments.

According to the government, regardless of the model chosen for  auction of each stretch of railroad, it will be guaranteed the right of ticket for interested transporters and mutual traffic.

Railroad in GO/TO/MA /PA

NORTH-SOUTH RAILROAD Palmas/TO  – Anápolis/GO and Barcarena/PA-Açailândia/MA
Total extension: 1,430 km
Estimated investment: R$ 7,8 billion
Goal: to conclude the running North-South, in its north stretch, with exits for the ports of the North Arc

Railroad in GO/MG/SP/MS

RAILROAD NORTH-SOUTH Anápolis/GO-Estrela D’ Oeste/SP-Três Lagoas/MS
Total extension: 895 km
Estimated investment: R$ 4.9 billion
Goal: to conclude the running North-South in its stretch south with interconnection with agroindustrial pole in Três Lagoas

Railroad in MT/PA

LUCAS OF RIO VERDE/MT-MIRITITUBA/PA

Total extension: 1,140 km
Estimated investment: R$ 9.9 billion
Goal: to improve the draining of the agricultural production of MT for the waterway of the Tapajós

RIO DE JANEIRO /RJ-VITÓRIA/ES

Total extension: 572 km
Estimated investment for the study accomplished for the governments of it YOU ARE and RIO DE JANEIRO: R$ 7,8 billion
Goal: to integrate the port of the Rio de Janeiro and the private terminals of both states to the port of Vitória and Tubarão

BI-OCEANIC RAILROAD

Estimated Brazilian stretch – 3.5 thousand km
Estimated investment on the basis of the cost of construction and rolling material of other Brazilian railroads: R$ 40 billion
Strategic route of draining of the production, via Pacific, for the Asian markets

NEW INVESTMENTS IN EXISTING CONCESSIONS

Estimate of investments: R$ 16 billion

Projects in negotiation with the concessionaires:
– Increase of traffic capacity
– New patios
– Reduction of urban interferences
– Duplications
– Construction of new branches
– Equipment of track and signaling
– Increase of Fleet

Ports

For Ports, the government foresees investments of R$ 37,4 billion. The industry also was part of the PIL of 2012 but, as well as in the case of the railroads, no project left the paper.

The forecast is for leasing 50 areas for freight movement in public ports, administered by the Union, in a total of R$ 11,9 billion. And 63 authorizations for construction of private parts, the TUPs calls, with an estimated investment of R$14, 7 billion. The government also intends to make the lease renewal anticipated, which may inject over R$ 10,8 billion in the industry.

Initially, leases of 29 areas in the port of Santos, the largest in the country, are foreseen, besides another 20 in the port of Para. In a second block it will be include areas in the ports of Paranaguá, Itaqui, Santana, Manaus, Suape, São Sebastião, São Francisco do Sul, Aratu, Santos and Rio de Janeiro.
 
STAGE 1
Grains – Para (5) and Santos (1)
Cellulose – Saints (2)
Expected investment: R$ 2.1 billion
STAGE 2
Bulk – Para (2) and Santos (4)
General and Containers Freight – Para (1) and Santos (2)
Fuel and GLP – Para (12)
Expected investment: R$ 4.7 billion

Financing

The government also modified the model of financing of the projects for this new phase of the PIL with the Goal to diminish the participation of public resources, via Brazilian Development Bank (BNDES). This is reflective of the fall in the tax collection and of the fiscal adjustment promoted by the president, which reduced the capacity of investment of the government.

The new model foresees a mechanism to stimulate the participation of private financing, for the market, via emission of debentures. The larger the emission, the greater the access of the concessionaire to the resources of the BNDES with subsidized interest. This system did not exist in the first phase of the PIL, 2012.

According to BNDES CEO, Luciano Coutinho, the concessionaires will be able to   finance up to 70% of the works cost with bank resources. However, only a part of it will have subsidized interest. Over the rest there will be market interests

How it works

For highways, BNDES financing with subsidized interest will be restricted to 35% do the Project value, in case there will not have debentures emission by the consortium. But it may reach up to 45%, in case the market also contributes to 35%.

But in the case of the railroads, where the risk is bigger, the BNDES will finance up to 70% of the works with interests lower, regardless of the presence of resources via debentures.

 Joaquim Levy, Secretary of the Treasury, said that almost the “strategy” Goals at “to bring new sources of financing” for the infrastructure projects in Brazil, today defrayed that totally for public resources.

Levy pointed that the government studies mechanisms to reduce the risk of the investors, to turn the concessions more attractive, also for foreign investors.

“They are long term projects and it is fundamental that increasingly let us have macro and microeconomic  stability, which allows the people to take long term risk”, the minister said during the ceremony that announced the new phase of the PIL.

Car Wash

The minister of the Planning, Nelson Barbosa, confirmed this Tuesday (9), during the launching of the new plan of concessions of the federal government, that companies under suspicions of involvement in the project of corruption of Petrobras will be able to participate in the auctions.
“These firms can participate, but most important it is that Brazil has a diversified industry. It has some average firms, that can grow. I have full confidence that engineering capacity exists in Brazil to make these projects feasible. It has a demand restrained for infrastructure in Brazil. This demand, with prices certain, will generate capacity to invest”, declared the minister.

This Monday (8), the same agreement had already been expressed by the General Comptroller’s Office (CGU). To the journalists, the minister of the CGU, Valdir Simão, explained that the companies will only be forbidden to sign contracts with public agencies if they are declared incapable at the end of the administrative proceeding they answer at CGU.

Overall, 29 companies are being investigated by the Operation Car Wash at the CGU. Besides the risk to stay forbidden to close contracts with the public administration, these companies can be penalized by the Executive, if they are considered guilty, with fines or other penalties foreseen in legislation.