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Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
Brazil's Economic Outlook and Infrastructure Investment Opportunities
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Brazil's Economic Outlook and Infrastructure Investment Opportunities

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  1. 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
  2. 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
  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
  4. 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
  5. Economic Outlook
  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
  7. 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 Produced by: Ministry of Finance 9
  8. 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 Produced by: Ministry of Finance 18 Se p 20 13 20 Ja n 12 20 Ja n Ja n 20 11 1.0 10
  9. 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 Produced by: Ministry of Finance 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
  10. 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 Produced by: Ministry of Finance 12
  11. 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 Produced by: Ministry of Finance 13
  12. 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 Source: Central Bank of Brazil Produced by: Ministry of Finance 14
  13. 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 Produced by: Ministry of Finance Sa Ch i na * 0 * June 2013 ** May 2013 *** January 2013 Economic Outlook 900 15
  14. 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 Produced by: Ministry of Finance 16
  15. 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) Produced by: Ministry of Finance 17
  16. 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 Source: Central Bank of Brazil Produced by: Ministry of Finance 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
  17. 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 Produced by: Ministry of Finance 19
  18. 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 Produced by: Ministry of Finance 20
  19. 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) Produced by: Ministry of Finance 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
  20. 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 Produced by: Ministry of Finance 22
  21. 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) Produced by: Ministry of Finance 23
  22. 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) Produced by: Ministry of Finance -1.4 3Q 2012 4Q 2012 1Q 2013 2Q 2013 24
  23. 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 Source: Brazilian Institute of Geography and Statistics (IBGE) and Central Bank of Brazil Produced by: Ministry of Finance 25
  24. 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 Produced by: Ministry of Finance 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
  25. 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 Source: International Monetary Fund (IMF) - Fiscal Soundness Indicators Produced by: Ministry of Finance 27
  26. 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 Source: Central Bank of Brazil Produced by: Ministry of Finance 28
  27. 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 Source: International Monetary Fund (IMF) - Fiscal Monitor and Central Bank of Brazil Produced by: Ministry of Finance 29
  28. 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) Produced by: Ministry of Finance 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
  29. 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) Produced by: Ministry of Finance 31
  30. Economic Development and Demand for Infrastructure
  31. 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 Source: Brazilian Institute of Geography and Statistics (IBGE) Produced by: Ministry of Finance 34
  32. 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 Produced by: Ministry of Finance 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 Economic Development and Demand for Infrastructure 2.0 35
  33. Ministry of Finance Increasing demand for infrastructure services: airline passengers Airline traffic, in millions of passengers 120 2002-2012: 182.3% growth 100 Economic Development and Demand for Infrastructure 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) Produced by: Ministry of Finance 36
  34. 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 Economic Development and Demand for Infrastructure 300 Source: Ministry of Development, Industry and Foreign Trade (MDIC) Produced by: Ministry of Finance 37
  35. 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 Economic Development and Demand for Infrastructure 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) Produced by: Ministry of Finance 38
  36. 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 Economic Development and Demand for Infrastructure 80 Source: Brazilian Association of Highway Concessionaires (ABCR) Produced by: Ministry of Finance 39
  37. 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 Economic Development and Demand for Infrastructure 3.0 Source: Brazilian Association of Automotive Vehicle Manufacturers (ANFAVEA) Produced by: Ministry of Finance 40
  38. Ministry of Finance Railroad volumes Revenue tonne kilometers (RTKs), in billions 2002-2012: 77.4% growth 300 Economic Development and Demand for Infrastructure 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) Produced by: Ministry of Finance 41
  39. 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 Economic Development and Demand for Infrastructure 162.8 Source: Ministry of Agriculture, Livestock and Food Supply (MAPA) Produced by: Ministry of Finance 42
  40. 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 Economic Development and Demand for Infrastructure Producer Source: Food and Agriculture Organisation (FAO) Produced by: Ministry of Finance 43
  41. Capital Market Instruments
  42. 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: Capital Market Instruments 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
  43. Ministry of Finance Financial Instruments for Infrastructure Investments • 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 Capital Market Instruments • 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. Produced by: Ministry of Finance and Brazilian Development Bank (BNDES) 47
  44. Ministry of Finance Financial Instruments for Infrastructure Investments • Fundos de Investimento em Direitos Creditórios (FIDC) Definition Benefits for non-resident investors* Investment Fund in Credit Rights • Zero Income Tax Rate (IR) • Zero Tax on Financial Operations (IOF) Minimum Requirements Capital Market Instruments • 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 Produced by: Ministry of Finance and Brazilian Development Bank (BNDES) 48
  45. Ministry of Finance Financial Instruments for Infrastructure Investments • Debêntures de Infraestrutura Benefits for nonDefinition -resident investors* Infrastructure Debentures Minimum Requirements Capital Market Instruments • 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 Produced by: Ministry of Finance and Brazilian Development Bank (BNDES) 49
  46. Ministry of Finance Financial Instruments for Infrastructure Investments • Fundos de Debêntures Incentivados Definition Brazilian Infrastructure Bonds Investment Funds Benefits for non-resident investors* • Zero Income Tax Rate (IR) • Zero Tax on Financial Operations (IOF) Minimum Requirements • 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. Produced by: Ministry of Finance and Brazilian Development Bank (BNDES) Capital Market Instruments 50
  47. Ministry of Finance Financial Instruments for Infrastructure Investments • 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 http://www.planalto.gov.br/ ccivil_03/_Ato2011-2014/2012/Lei/ L12715.htm#art71 Decree 7,632/11 http://www.planalto.gov.br/ ccivil_03/_Ato2011-2014/2011/ Decreto/D7632.htm Brazilian Financial and Capital Markets Association http://portal.anbima.com.br/Pages/ home.aspx Produced by: Ministry of Finance and Brazilian Development Bank (BNDES) Capital Market Instruments Law 12,431 of year 2011 51
  48. Highways
  49. 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) Produced by: Ministry of Finance 54
  50. 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 Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 55
  51. 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 • Total Length: 937 km centers in Brazil - Rio de Janeiro and Belo Horizonte - to the fourth most • Length to be widened: 715 km 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 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: up to 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 Highways GO Criteria Concession Term: 30 years Number of Toll Plazas: 11 Criteria: lowest tariff * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 56
  52. 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 • Total Length: 817 km • Length to be widened: 817 km 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. 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 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: up to 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 Highways Salvador Criteria Concession Term: 30 years Number of Toll Plazas: 8 Criteria: lowest tariff * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 57
  53. 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 Concession Term: 30 years Number of Toll Plazas: 9 Criteria: lowest tariff Economic and Financial Modeling CAPEX*: US$ 2.2 billion OPEX: US$ 1.3 billion 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: up to 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 • 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). • Total Length: 772 km Connects the southern coast of Bahia • Length to be widened: 551.3 km to the states of Espírito Santo and Rio The project includes widening, de Janeiro. BR-101 is a very important maintenance and operation of the 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 construction of 67 km of side roads. share of Brazilian population. Important ports are also connected by this road. Ministry of Finance In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 58
  54. 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 • Total Length: 377 km • Length to be widened: 196.4 km The project includes widening, maintenance and operation of the highway. Other widening projects are also plannedw, including the construction of a ringroad and 13 km of side roads. Demand Projection (AADT): 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 Concession Term: 30 years Number of Toll Plazas: 5 Criteria: lowest tariff Economic and Financial Modeling CAPEX*: US$ 916 million OPEX: US$ 739 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: up to 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 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 59
  55. 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). * Without benefits and indirect expenses * *TJLP - Long Term Interest Rate, currently 5% p.a. *** Special Purpose Entity 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 • Length to be widened: 769.5 km to become an important hub. BR-153 is CAPEX*: US$ 3.0 billion The project includes widening, the main road to reach the city of Manaus OPEX: US$ 1.4 billion maintenance and operation of the 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: construction of 10 km of side roads. among other important industries. Term: 25 years (Grace period: 5 years) TO-080 Rate: TJLP** + 2%a.a. Palmas Real leveraged IRR: up to 16% TO per year, in real terms. Gurupi BA MT Debt to equity ratio: 70% / 30% BR-153 Uruaçu Equity support: up to 49% of SPE*** or holding’s share capital BR-060 GO Anápolis (Institutions: public banks and 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 Previous License (LP) and Installation To be awarded MS License (LI) of duplication works 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 • Total Length: 814 km In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 60
  56. 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 CAPEX*: US$ 3.9 billion OPEX: US$ 1.8 billion 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: up to 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 • Length to be widened: 648 km 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. In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 61
  57. 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. • Total Length: 847 km • Length to be widened: 807 km The project includes widening, maintenance and operation of the highway. Other 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 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: up to 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 BR-163 BR-364 Economic and Financial Modeling CAPEX*: US$ 2.8 billion OPEX: US$ 1.3 billion TO MT Term: 30 years. Criteria: lowest tariff. In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 62
  58. Ministry of Finance Road Concession – BR-163: from Sinop (MT) to MT/MS border Object Demand • Section: BR-163, Sinop – Border MT/MS • Total Length: 851 km • Length to be widened: 453 km The project includes widening, maintenance and operation of the highway. Other 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 Number of Toll Plazas: 9 Criteria: lowest tariff Economic and Financial Modeling CAPEX*: US$ 2.7 billion OPEX: US$ 1.4 billion 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: up to 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 Sinop Demand Projection (AADT): 2014 (5,815), 2019 (7,140), 2024 (8,757) In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 63
  59. Railways
  60. 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 Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 66
  61. 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) Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and 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. Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Jundiaí SP Concession characteristics Build, operate and transfer Ministry of Finance * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 67
  62. 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. Concession characteristics Build, operate and transfer Estimated CAPEX: US$ 3.65 billion Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic control. 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). 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 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. Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Financing Conditions Term: 30 years (Grace period: 5 years) * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 68
  63. 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 Concession characteristics Build, operate and transfer Estimated CAPEX: US$ 1.39 billion Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic control. Risk Mitigation: Demand Risk (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 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. Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Financing Conditions Term: 30 years (Grace period: 5 years) * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 69
  64. 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 Concession characteristics Build, operate and transfer Estimated CAPEX: US$ 1.78 billion Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic control. Risk Mitigation: Demand Risk (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). Ouro Verde de Goiás GO Goiânia Campo Grande Estrela d’Oeste Andradina MS Panorama Dourados Concession: Ouro Verde de Goiás - Dourados To be awarded 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) Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Ministry of Finance * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 70
  65. 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 Concession characteristics Build, operate and transfer Estimated CAPEX: US$ 4.80 billion Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic control. Risk Mitigation: Demand Risk (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). 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 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. Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Financing Conditions Term: 30 years (Grace period: 5 years) * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 71
  66. 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 Concession characteristics Build, operate and transfer Estimated CAPEX: US$ 1.52 billion Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic 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 Risk Mitigation: Demand Risk (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). 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. Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Financing Conditions Term: 30 years (Grace period: 5 years) * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 72
  67. Ministry of Finance Railway Concession: from Corinto (MG) to Campos (RJ) Object Demand Section: Anápolis – Corinto – Campos Concession characteristics Creates new possibilities for the outflow of grains Build, operate and transfer and minerals from production centers through Estimated CAPEX: US$ 7.80 billion main ports. Extension: 1,706 km Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic control. Uruaçu BA GO Risk Mitigation: Demand Risk (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). 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 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. Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Financing Conditions Term: 30 years (Grace period: 5 years) * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 73
  68. Ministry of Finance Railway Concession: from Feira de Santana (BA) to Ipojuca (PE) Object Demand Section: Feira de Santana – Ipojuca Extension: 893 km Concession characteristics Modernizes the northeastern railway network, Build, operate and transfer linking the major ports and markets Estimated CAPEX: US$ 3.78 billion Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic control. PB Salgueiro BA PE SE Aracajú AL Risk Mitigation: Demand Risk (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). 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 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. Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Financing Conditions Term: 30 years (Grace period: 5 years) * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 74
  69. 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 Concession characteristics Build, operate and transfer Estimated CAPEX: US$ 1.17 billion Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic 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 Risk Mitigation: Demand Risk (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). RJ Panorama Concession: Lapa – Paranaguá To be awarded 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. Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Financing Conditions Term: 30 years (Grace period: 5 years) * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 75
  70. 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 Concession characteristics Build, operate and transfer Estimated CAPEX: US$ 3.13 billion Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic 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 Risk Mitigation: Demand Risk (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). RJ Panorama Concession: Lapa – Paranagua To be awarded 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. Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Financing Conditions Term: 30 years (Grace period: 5 years) * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 76
  71. 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 Concession characteristics Build, operate and transfer Estimated CAPEX: US$ 10.73 billion Rail infrastructure builder and manager: Concession for railway exploitation, comprising: construction, maintenance, signaling and comunications systems, and traffic 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 Risk Mitigation: Demand Risk (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). RJ Panorama Forno Port Duque de Caxias Port Terminal Concession: Mairinque – Rio Grande To be awarded 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. Rate: TJLP* + 1%a.a. 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. Equity support: up to 49% of SPE** or holding’s share capital (Institutions: public banks and pension funds). Railways Concession Term: 35 years Construction to be completed up to the 5th year of the concession term. Financing Conditions Term: 30 years (Grace period: 5 years) * TJLP - Long Term Interest Rate, currently 5% p.a. ** Special Purpose Entity Updated information available at www.logisticsbrazil.gov.br Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 77
  72. 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 Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 78
  73. Ports
  74. 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 Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 80
  75. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Special Secretariat of Ports Produced by: Ministry of Finance 81
  76. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: National Logistics & Planning Company (EPL) Produced by: Ministry of Finance 82
  77. Airports
  78. 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) Produced by: Ministry of Finance 84
  79. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Civil Aviation Secretariat (SAC) Produced by: Ministry of Finance 85
  80. 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 Source: Civil Aviation Secretariat (SAC) Produced by: Ministry of Finance 86
  81. 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 Source: Civil Aviation Secretariat (SAC) Produced by: Ministry of Finance 87
  82. 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. OPEX: US$ 4.63 billion *BNDES financing conditions applied to airports already granted (Guarulhos, Viracopos and Brasília). In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Civil Aviation Secretariat (SAC) Produced by: Ministry of Finance 88
  83. 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 Source: Civil Aviation Secretariat (SAC) Produced by: Ministry of Finance 89
  84. 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 Source: Civil Aviation Secretariat (SAC) Produced by: Ministry of Finance 90
  85. 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. OPEX: US$ 1.57 billion *BNDES financing conditions applied to airports already granted (Guarulhos, Viracopos and Brasília) In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Civil Aviation Secretariat (SAC) Produced by: Ministry of Finance 91
  86. 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 Source: Civil Aviation Secretariat (SAC) Produced by: Ministry of Finance 92
  87. Oil and Gas
  88. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: National Agency of Petroleum, Natural Gas and Biofuels (ANP) and Ministry of Mines and Energy (MME) Produced by: Ministry of Finance 94
  89. 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 Source: National Agency of Petroleum, Natural Gas and Biofuels (ANP) and Ministry of Mines and Energy (MME) Produced by: Ministry of Finance 95
  90. 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 Source: National Agency of Petroleum, Natural Gas and Biofuels (ANP) and Ministry of Mines and Energy (MME) Produced by: Ministry of Finance 96
  91. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: National Agency of Petroleum, Natural Gas and Biofuels (ANP) and Ministry of Mines and Energy (MME) Produced by: Ministry of Finance 97
  92. 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 Source: National Agency of Petroleum, Natural Gas and Biofuels (ANP) and Ministry of Mines and Energy (MME) Produced by: Ministry of Finance 98
  93. 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 Source: National Agency of Petroleum, Natural Gas and Biofuels (ANP) and Ministry of Mines and Energy (MME) Produced by: Ministry of Finance Oil and Gas Bidding judgment criteria: 99
  94. 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 Source: National Agency of Petroleum, Natural Gas and Biofuels (ANP) and Ministry of Mines and Energy (MME) Produced by: Ministry of Finance 100
  95. Electricity
  96. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 102 Ministry of Finance
  97. 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 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 103 Ministry of Finance
  98. 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 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 104 Ministry of Finance
  99. 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) Source: Energy Research Office (EPE) Produced by: Ministry of Finance Electricity 105 Ministry of Finance
  100. 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 Produced by: Ministry of Finance Electricity • Current credit conditions: • Current credit conditions: • 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 • Grace period: up to 6 months after • Grace period: up to 6 months after commercial operation date; commercial operation date; 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
  101. 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 Projects able to bid 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 107 Ministry of Finance
  102. Hydropower Expansion: 2013 electricity auctions • November 2013 Auction Type Projects able to bid 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 108 Ministry of Finance
  103. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 109 Ministry of Finance
  104. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 110 Ministry of Finance
  105. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 111 Ministry of Finance
  106. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 112 Ministry of Finance
  107. 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 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 113 Ministry of Finance
  108. Transmission Line Auctions Electricity • Bidders • Legal Entities: National or Foreign • Equity Funds: alone or in a consortium • Clearance • Clearance after auctions and publication of winning bids • Winners • Bidder with lowest Allowed Annual Revenue (RAP) • Winners will sign long-term contracts (30 years) • Regulated contracts • Indexation by IPCA (Consumer Price Index) • Contracts submitted to the Periodic Rate Reviews • Financing • RAP as collateral for financing by the BNDES Source: Energy Research Office (EPE) Produced by: Ministry of Finance 114 Ministry of Finance
  109. Transmission Line Auctions: sequence of events Public Notice of Auction Auction application and bid guarantees due to ANEEL Auction held at BM&FBOVESPA Accepted bid guarantee instruments: cash deposit, surety bond, bank guarantee, Brazilian Government Bonds (1% of estimated investment) -2.8 Electricity ANEEL approval of technical capacity of the winners of the auction Approval of Auction Results TL Auction Winners deliver documentation to ANEEL Celebration of concession contract between winner and ANEEL Replacement of bid guarantees with the guarantee of faithful execution of the contract (5% of estimated investment) Source: Energy Research Office (EPE) Produced by: Ministry of Finance 115 Ministry of Finance
  110. BNDES FINEM (Financing to Enterprises) Financial Aspects • Access to financing available to national and international companies with head offices and management in Brazil, and legal entities of public law • Current credit conditions: • Leverage: up to 70% • Total Loan Period: up to 14 years • Grace period: up to 6 months after commercial operation date. • Interest rate: TJLP*+1.3%+credit risk spread Source: Energy Research Office (EPE) Produced by: Ministry of Finance Electricity *TJLP: Long Term Interest Tax, currently 5.0% 116 Ministry of Finance
  111. Transmission Line Past Auctions: main results • Consolidated results of auctions from 2000 to 2012 Number of Auctions Length (km) Investment (US$ billion) (*) 24 51,000 13.9 Electricity • Transmission Line Auction of Dec, 2012: Main Results • Number of applicants: 15 (includes state-owned companies, private groups, 4 foreign groups, and equity funds) • Total TL** tendered: 3,822 Km • Estimated investment: US$ 1.7 billion • Average discount: 21.7% • Stiff competition: for example, in “500 kV Estreito - Itabirito” transmission line auction, there were 305 bids that resulted in a 16.6% discount * current values **TL – Transmission Line In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) and National Electricity Agency (ANEEL) Produced by: Ministry of Finance 117 Ministry of Finance
  112. Main Projects: north-southeast expansion Physical Description • Main section: Connects the North and Southeast Region, with DC Link between the states of Pará and Minas Gerais Xingo MARANHÃO Picuruí (2) Itacaúnas PARÁ Paraupebas (2) 800 KV DC 2,050 Km Bipole 1 Colinas Miracema TOCANTINS 500 KV AC 2,244 Km MATO GROSSO GOIÁS Terminal Minas • Increase of 4,000 MW in exchange capacity between the North and Southeast Regions Financial Aspects • Concession Term: 30 years • Estimated Investment: US$ 2.6 billion Electricity • Length: • 2,050 km on Direct Current • 2,244 km on Alternating Current Goals • Promotes interconnection between two major subsystems, enabling the exchange of electricity between regions North and Southeast. Project Requirements • TLs in Direct Current: 800 kV • Increases in Existing System • Bidding in 2013 • Winning Bidder: the lowest RAP (Allowed Annual Revenue) In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 118 Ministry of Finance
  113. Main TL Projects to be Auctioned in 2013 2nd semester 2013 - transmission lines (EPE proposal) Associated Projects Voltage Length Investment (kV) (Km) (US$ billion) State TL Itabirito 2 – Vespasiano 2, CS To meet electricity demand growth Projects MG 500 90 TL Barro Alto – Itapaci, C2 GO 230 68 50 500 390 SP 500 370 TL Araraquara 2 - Itatiba, CS SP 500 198 TL Araraquara 2 - Fernão Dias, CS Expansion of the Interconnection N/SE 230 SP/PR TL Marimbondo II - Campinas Expansion before Belo Monte RS TL Itatiba – Bateias SP 500 240 TL Xingu – Terminal Minas 800 kV (CC – Bipolo 1) PA/SP 800 2,050 TL 230 kV Miranda – Chapadinha II C1 PA 230 120 TL 230 kV Imperatriz – Porto Franco C2 MA 230 111 MA 230 230 88 TL Rio Branco – Feijó AC 230 357 TL Feijõ – Cruzeiro do Sul AC 230 1.3 95 GO Estimated Investment of US$ 2.4 billion (*) 78 TL 230 kV Vila do Conde - Tomé-Açu C2 0.3 140 230 TL 230 kV Trindade – Firminópolis Integration of isolated systems 230 MA TL 230 kV Ribeiro Gonçalves – Balsas C2 To meet electricity demand growth MA TL 230 kV Coelho Neto – Chapadinha II C1 0.2 Electricity TL Candiota (Presidente Médici) – Bagé 2 Expansion S/SE 0.1 Total 0.3 0.2 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 2.4 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 300 4,745 * Includes estimated investment in substations 119 Ministry of Finance
  114. Main TL Projects to be Auctioned from 2014 to 2017 Associated Projects To meet electricity demand growth Connection to Teles Pires Power Plants Expansion of the Interconnection N/SE N/SE Systems Reinforcements Connection to Tapajós Power Plants Total State Voltage (kV) PA PA PA PA TO TO MG MG MA PE/PB RN/CE SP PR/SC RS GO PI/TO MS PR MT TO TO PA PA PA PA PA/AM BA RN RN RN SP/PR PR MT/GO MT PA/RJ SP SP/RJ MG/SP PA/ND ND 230 500 230 500 500 230 230 230 500 500 500 440 500 230 230 230 230 230 230 500 230 230 230 230 230 230 500 500 500 230 500 230 500 500 800 KV CC 440 500 500 ND ND Length (Km) Investment (US$ billion) 64 59 79 116 30 120 135 61 107 100 235 142 158 205 88 95 85 50 275 30 60 63 185 195 130 137 280 250 64 68 120 35 348 350 2,575 52 340 660 2,700 1,000 11,846 Estimated investment US$ 6.0 billion (including substations) 1.0 Electricity Expansion S/SE Projects TL 230 kV Marituba - Castanhal – C1 TL 500 kV Vila do Conde - Marituba C1 TL 230 kV Integradora Sossego - Xinguara C2 TL 500 kV Parauapebas - Integradora Sossego CD TL 500 kV Miracema - Lajeado C2 TL 230 kV Lajeado - Palmas CD TL 230 kV Janaúba 3 – Irapé C1 TL 230 kV Araçuaí 2 – Irapé C2 TL 500 kV Miranda II – São Luís II C3 TL 500 kV Pau Ferro - Santa Rita CS TL 500 kV Açu III - Quixadá CS TL 440 kV Ilha Solteira - Água Vermelha C2 TL Curitiba Leste – Blumenau 500 kV TL Maçambará – Santo Ângelo C2 TL Trindade - Firminópolis TL Ribeiro Gonçalves - Balsas - C2 TL Paraíso 2 - Chapadão - C2 TL Foz do Chopim - Realeza TL Paranatinga - Canarana TL Miracema - Lajeado, C2 TL Lajeado - Palmas, C1 e C2 TL Xingu - Altamira, C1 TL Altamira - Transamazônica, C2 TL Transamazônica - Tapajós, C1 TL Oriximiná - Juruti, C1 e C2, CD TL Juruti - Parintins, C1 e C2, CD TL Morro do Chapéu II - Sapeaçu TL Quixadá - Açu III TL João Câmara III - Ceará Mirim II, C2 TL João Câmara II - Ceará Mirim II, C2 TL 500 kV Assis – Londrina C2 TL Curitiba Norte - Bateias 230 kV TL 500 kV Paranatinga – Ribeirãozinho C3 TL 500 kV Cláudia – Paranatinga C3 TL Xingu – T. Rio 800 kV (CC Bipolo 2) TL 440 kV Fernão Dias – Cabreuva TL 500 kV Fernão Dias – Nova Iguaçu TL 500 kV T. Minas – Cachoeira Paulista CD TL of Interconnection Receptor sustem reinforcement 0.1 0.3 1.7 0.3 2.6 6.0 In the first half of September 2013, the average exchange rate was approximately US$ 1 = R$ 2.30 Source: Energy Research Office (EPE) Produced by: Ministry of Finance 120 Ministry of Finance
  115. Appendix
  116. Ministry of Finance Main Types of Business Organizations in Brazil Main Types of Business Organizations in Brazil Limited Liability Company (LLC) Joint-Stock Company (Business Corporation) • Law No. 10,406/2002 – Brazilian Civil Code • Law No. 6,404/1976, supplemented by Law No. 10,303/2001. (from Article 1,052 to Article 1,087). Applicable Legislation • Normative Ruling No. 100, of April 19, 2006, issued by the National Trade Registry Department (DNRC), establishing the Manual on Registry Acts of Sociedade Anônima. • Business company formed by individuals or capital. • Business corporation formed by either public or private capital (either publicly- or closely-held companies). • For-profit. Legal Name • Corporate Name: name of one or more of company’s partners + “Limitada” or “Ltda.”; or • Denomination: corporate object + “Limitada” or “Ltda.” • For-profit. • Denomination: fictitious business name or shareholders´ civil name + company’s core business + “Sociedade Anônima” or “Companhia” or “S.A.” or “Cia.” (the latter cannot be placed at the end of corporate denomination). • Law No. 12,441/2011, which amends provisions in the Brazilian Civil Code, introducing item VI to Article 44 and Article 980-A to Book II, Special Part. Additionally, it also amends the sole paragraph of Article 1,033. • Normative Ruling No. 117, of November 22, 2011, issued by the National Trade Registry Department (DNRC), establishing the Manual on Registry Acts of Empresa Individual de Responsabilidade Limitada. Appendix Classification • Normative Ruling No. 98, of December 23, 2003, issued by the National Trade Registry Department (DNRC), establishing the Manual on Registry Acts of Sociedade Limitada. Eireli (Individual Company Of Limited Liability) • Individual company. • For-profit. • Corporate Name: holder´s name + “Eireli”; or • Denomination: corporate object + “Eireli”. Source: Brazilian Trade and Investment Promotion Agency (APEX) Produced by: Ministry of Finance 122
  117. Ministry of Finance Main Types of Business Organizations in Brazil Partners Composition • Two or more partners. • Individuals or legal entities (of Brazilian or foreign origin1). • At least two shareholders for closely-held companies and three for publicly-held ones. • Individuals or legal entities (of Brazilian or foreign origin). • Articles of association/Bylaw. • Articles of incorporation/Bylaw. • Registry and filing at the competent Board • Registry and filing at the competent Board of Trade of Trade (Junta Comercial). (Junta Comercial). Corporate Capital • Divided into shares. • No minimum capital is required, but shareholders must • Divided in quotas. integrate at least 10% of the issuance price of the shares subscribed in cash. • No minimum corporate capital is legally • The bylaws will establish: required. - the number of shares; and • An increase of the corporate capital is - whether the shares will have nominal value or not. admitted as soon as all the subscribed • The corporate capital may be increased in the quotas are paid. Preferential rights are following cases: granted to keep the original share of the - issuance of shares provisioned in the bylaws; existing partners in the corporate capital. - conversion of debentures and participation certificates into shares; • The corporate capital may be subject to - deliberation of the Annual General Meeting regarding reduction in the following cases: capitalization of profits or reserves or issuance of new (i) occurrence of losses; or (ii) corporate capital is excessive pursuant to shares. the company’s corporate object. • The corporate capital may be reduced in the case of loss or excessive capital pursuant to the company´s corporate object. * Once the individual opts for an Eireli, he/she can run only one company under that modality. • Incorporation document (private instrument). • Registry and filing at the competent Trade Board (Junta Comercial). • Given that the company relies on a sole holder, it is not required that the corporate capital is divided into quotas. • The minimum corporate capital may not be less than one hundred times the sum of the highest minimum salary applied in Brazil on the date of filing for registration. Appendix Articles of Association / Incorporation • Only one holder – a one-man undertaking*. • Individual2 (of Brazilian or foreign origin). • Once it is immediately paid in, the corporate capital may be increased at any time. • The corporate capital may suffer a reduction, respected the minimum value required by law. Source: Brazilian Trade and Investment Promotion Agency (APEX) Produced by: Ministry of Finance 123
  118. Ministry of Finance Main Types of Business Organizations in Brazil • The articles of association shall establish the time limit for payment. Paying In Partners Liability • The bylaws shall establish the time limit for payment. • Any assets shall be used for paying in, provided that they are susceptible to cash assessments. • Any assets shall be used for paying in, provided that they are subject to expert assessment. • Any assets shall be used for paying in, provided that they are susceptible to cash assessments. • No liability: share subscribed and paid. • Limited to the capital that has been paid in. • Limited to the shares shareholders subscribed and have not yet paid for. • Unlimited: in case the corporate capital has not yet been paid in, unobserving the required minimum value. • Limited to the capital that has been paid in. • In case the corporate capital has not been fully paid in, the partners shall be deemed unlimitedly and jointly liable. • Control defined by the number of quotas. Control and Management • Control exercised by the sole holder. Appendix • Control defined by shareholders with voting rights. The controlling shareholder • Resolutions are taken during meetings (up owns a major portion of the voting capital. to 10 partners) or general meetings (more • In compliance with company’s bylaws, than 10 partners). corporate management will be performed • The company may be managed by a non- by the Board of Directors and the Executive partner, should that be provisioned in the Office, or solely by the Executive Office. articles of association. • The chair of the Executive Office, whether • A foreigner may be appointed to be shareholder or not, must reside in Brazil4. the manager provided that he/she has permanent visa and is not otherwise • The members of the Board of Directors may prevented from occupying management reside abroad, provided that they appoint a positions3. Brazilian-resident representative. • Statement, in the incorporation document, that the corporate capital has been fully paid in. • An Eireli may be managed by its owner or by a non-owner, as indicated on the incorporation document. • A foreigner may be appointed to be the manager, provided that he/ she has a permanent visa and is not otherwise prevented from occupying management positions5. Source: Brazilian Trade and Investment Promotion Agency (APEX) Produced by: Ministry of Finance 124
  119. Ministry of Finance Main Types of Business Organizations in Brazil Termination/ Dissolution • The dissolution occurs in the following cases: (i) at the end of its term; (ii) unanimous resolution of all quota holders; (iii) resolution of quota holders representing an absolute majority, in companies with an undetermined term of duration; (iv) insufficient plurality of quota holders; (v) expiration of company´s license to operate; (vi) court decision; and (vii) bankruptcy (Article 1,033; Article 1,034; and Article 1,087 of the Brazilian Civil Code). Appendix • Judicial or extrajudicial liquidation shall take place after the company is terminated. The remaining assets shall be distributed to the quota holders proportionally to their respective quotas. • The dissolution comes into effect either by court decision or by the ruling of competent administrative authorities. Incorporation, merger and spin-off are forms of dissolution. • Compliance with Sociedade Limitada’s rules, wherever applicable. • Judicial or extrajudicial liquidation shall take place after the company is terminated. The remaining assets shall be distributed to the shareholders proportionally to their respective shares. 1 Foreign shareholding in business activities in Brazil is limited to the constitutional restrictions and constraints that discipline foreign shareholding in Brazilian companies. Normative Ruling No. 76/1998, issued by the National Trade Registry Department (DNRC), disciplines the filing of acts of commercial companies or cooperatives with foreign shareholders that are resident and domiciled in Brazil; individuals, of Brazilian or foreign origin, resident and domiciled abroad; and legal entities headquartered abroad. Its annex brings a list with business activities that are either restricted or forbidden to foreign shareholding. 2 As understood by the National Trade Registry Department (DNRC). 3 For further information see the Annex of Normative Ruling No. 76/1998, issued by the DNRC (only in Portuguese). 4 Individuals of foreign origin are entitled to exercise managing positions provided that they have a permanent visa. Individuals of foreign origin are entitled to be members of a company’s Audit Board if they reside in Brazil. 5 For further information see the Annex of Normative Ruling No. 76/1998, issued by the DNRC (only in Portuguese). • Credits: This document was prepared by the Legal Unit of Apex-Brasil in February, 2012. Staff: Silvia Menicucci (Legal Coordinator), Patricia Gonçalves dos Santos (Legal Supervisor) and Camila Paschoal (Attorney). English version: Simonny V. Soares. • The information disclosed in this document may be freely reproduced, provided the source is acknowledged. • This document does not replace legal advice from an attorney. 125
  120. Ministry of Finance Useful links Ministry of Finance http://www.brasil.gov.br/?set_ language=en http://www.fazenda.gov.br/ Planning and Logistics Company (EPL) National Agency for Civil Aviation (ANAC) http://www.epl.gov.br/index.php http://www.anac.gov.br Energy Research office (EPE) National Agency for Oil, Natural Gas and Biofuels (ANP) http://www.epe.gov.br http://www.anp.gov.br  National Transportation Agency (ANTT) National Agency of Waterway Transportation (ANTAQ) http://www.antt.gov.br  http://www.antaq.gov.br  Appendix Portal Brasil Produced by: Ministry of Finance 126
  121. Ministry of Finance Useful links Special Secretariat of Ports http://www.portosdobrasil.gov.br/ Civil Aviation Secretariat http://www.aviacaocivil.gov.br/ Brazilian Trade and Investment Promotion Agency (APEX) http://www2.apexbrasil.com.br/en Brazilian Development Bank (BNDES) http://www.bndes.gov.br/SiteBNDES/bndes/bndes_en/ Banco do Brasil http://www.mme.gov.br http://www.bb.com.br National Network for Investments Information (RENAI) Appendix Ministry of Mines and Energy CAIXA http://www.mdic.gov.br/sistemas_web/renai/ http://www.caixa.gov.br Produced by: Ministry of Finance 127
  122. Ministry of Finance Glossary - Institutions ABCR Brazilian Association of Highway Concessionaires CAGED General Registry of the Employed and Unemployed ANAC National Agency for Civil Aviation CMN National Monetary Council SAC Civil Aviation Secretariat Brazilian Financial and Capital Markets Association CVM Securities and Exchange Commission of Brazil STN Brazilian National Treasury Secretariat National Electricity Agency EPE Energy Research Office TCU Federal Court of Auditors Brazilian Association of Automotive Vehicle Manufactures EPL Brazilian Logistics & Planning Company National Agency for Oil, Natural Gas and Biofuels IBGE Brazilian Institute of Geography and Statistics ANTAQ National Agency of Waterway Transportation IMF International Monetary Fund ANTT National Transportation Agency IPEA Institute for Applied Economic Research APEX Brazilian Trade and Investment Promotion Agency MDIC Ministry of Development, Industry and Foreign Trade São Paulo Stock Exchange and the Brazilian Mercantile & Futures Exchange MME Ministry of Mines and Energy Brazilian Development Bank RAIS Annual Social Information Relation ANBIMA ANEEL ANFAVEA BM&FBOVESPA BNDES UNCTAD National Network for Investments Information United Nations Conference on Trade and Development Glossary ANP RENAI 128
  123. Ministry of Finance Glossary - Terms AADT Annual Average Daily Traffic CRI Certificate of Real Estate Receivables IPI Tax over Industrial Products IPCA Broad National Consumer Price Index / IBGE LLC Limited Liability Company Debt Service Coverage Ratio EBITDA Earnings Before Interest, Taxes, Depreciation and Amortization MP Legal Act EIRELE Individual Company Of Limited Liability PAC Growth Acceleration Program FDI Foreign Direct Investment PPA Pluri-Annual Plan FIC Fund of Funds FIDC Investment Fund in Credit Rights FIP Share Investment Fund PSI Investment Maintenance Program GDP Gross Domestic Product RAP Allowed Annual Revenue HPP Hydro Power Plant TJLP Brazil Long Term Interest Rate ICMS Merchandise Circulation and Services Tax TPP Thermal Power Plan IOF Financial Operation Tax SELIC Special System for Settlement and Custody PIS/COFINS PNAD Social Contributions National Survey by Household Sample/IBGE Glossary DSCR 129
  124. Ministry of Finance Ministry of Finance B R A Z I L I A N G O V E R N M E N T Art Visual Project and Final Art: Viviane Barros Cover: Alline Luz, André Nóbrega, Daniel Gizo and Viviane Barros Layout Development: Alline Luz, André Nóbrega, Letícia Lopes and Viviane Barros Design Trainee: Barbara Vonne and Marco Miranda www.fazenda.gov.br 130

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