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Investment Opportunities in Infrastructure in Brazil

3Out2018Oct3,2018
Infrastructure and Energy; Administrative Law

Federal Level

1. Investment Partnerships Program ("IPP")

The IPP program was created by the Federal Government with the objective of strengthening the coordination of investment policies in infrastructure through partnerships with the private sector.

Since its establishment, the program has already included 189 projects involving airports, ports, railways, roads, energy, oil and gas, hydroelectric generation and others. Among the 94 projects underway, the most important are those related to the transport sector.

Currently, the IPP schedule has eight published bid notices:

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2. Highways

2.1 Southern Integration Highway – BR-101/290/386/448/Rio Grande do Sul State (RS)

Object: Concession for exploitation of infrastructure and provision of public services for recovery, operation, maintenance, monitoring, conservation, implementation of improvements, expansion of the capacity and maintenance of the service level of the highway section.

This includes sections of: (i) BR-101/RS, between the Santa Catarina/Rio Grande do Sul border up to the junction with BR-290 (Osório); (ii) BR-290/RS, from the junction with BR-101(A) (Osório) to km 98.1; (iii) BR-386, from the junction with BR-285/377(B) (Passo Fundo) to the junction with BR-470/116(A) (Canoas); (iv) BR-448, from the junction with BR-116/RS-118 to the junction with BR-290/116 (Porto Alegre).

Investment: The envisaged investment is: (i) BRL 7.8 billion and operating costs of BRL 5.6 billion in relation to conservation, operation and maintenance of the highway section; (ii) investments of BRL 53 million in studies and research on technological development; and (iv) investments of BRL 31 million in improvements related to road safety.

For more information, please access the link

3. Ports

3.1 Cavaco Terminal, in the Port of Santana Port (AP) – (MCP1)

Object: Lease of terminal for handling general cargo (wood chips) in the port of Santana (Amapá State), which area has access to the dock and is 200m long and 12m deep.

Investment: The total amount is expected to be BRL 61 million. Also, the value of the lease contract is BRL 504 million (equivalent to the global gross revenue for the 25 years of the lease).

For more information, please access the link.

3.2 Liquid bulk terminal in the Port of Santos (São Paulo State) – (STS-13)

Object: The STS-13 Terminal is a brownfield area, located in the Organized Port of Santos (SP) covering an area of 59,500 m². The total storage capacity of its tanks is estimated to be 97,720 m³.

Investment: The estimated amount is BRL 198 million.

For more information, please access the link.

3.3 LPG terminals in the Port of Miramar (Pará State) – (BEL-06)

Object: The BEL 06 Terminal is a brownfield area dedicated to the handling of LPG. The project is for the assignment of an area located within the organized port, pursuant to an Onerous Assignment of Use (Cessão de Uso Onerosa) which will be awarded to the winner in an auction, competing with other interested parties.

Investment: The Assignment of Use in respect of the BEL 06 terminal, with an area of 35,500 m², will enable private sector investments to be made in the order of R$ 51.5 million, which will allow the capacity to be increased to 82,800 tons annually.

For more information, please access the link.

3.4 Solid bulk terminal in the Port of Santos – (STS-20)

Object: The STS-20 Terminal is an area for the handling of bulk solid minerals, specifically fertilizers and salt, being able to move other products, such as: salts, sulphates and carbonates. The STS-20 leasing area comprises three warehouses, totaling 29,278.04 m², with access by road (currently in use) and rail (not yet in use).

Investment: The estimated amount is BRL 149.98 million, to allow movement of 2.2 million tons of salt and fertilizer per year.

For more information, please access the link.

4. Communication 

4.1 Network communication management – COMAER (Aeronautics Command)

Object: The project consists of a Private Public Partnership (PPP) for the design, installation, updating, expansion, operation, management and maintenance of the communication infrastructure, management and control of Comaer for a period of 25 years.

Remuneration: The partnership is to replace 68 agreements currently in force, providing maximum annual federal revenue of R$ 182.5 million, to be financed by air navigation tariffs, which are: (i) Tariff for the Use of Communications and In-Route Air Navigation Assistance ("TAN"); (ii) Tariff for the Use of Communications and Radio-Air Navigation Assistance in the Control Area ("TAT / APP").

Investment: The contract value is BRL 4.56 billion. The estimated amount of investments is BRL 1.09 billion and the operational costs are BRL 2.19 billion.

For more information, please access the link.

5. Energy

5.1 Auction of Eletrobrás shares in Special Purpose Companies (SPE) – 18 batches.

Object: Offer of 18 batches, among which: (i) 8 batches will be composed of 59 SPEs operating in the wind generation segment, with approximately 1,605 MW of installed capacity; (ii) 10 batches will be composed of 12 SPEs that operate in the electric power transmission segment, with approximately 2,912 km of transmission lines and 5,530 MVA in transformation capacity.

For more information, please access the link.

5.2 Privatization of Amazonas Distribuidora de Energia S.A 

By Decree 8.893/2016, Resolutions 3/2016 and 20/2017 of the IPP and Decree 9.192/2017, the Federal Government established the basic rules for the privatization of six electricity distribution companies, which belong to the Centrais Elétricas Brasileiras S/A group ("Eletrobras").

The process is under way for the privatization of Amazonas Distribuidora de Energia S.A, which is responsible for serving 62 municipalities in the State of Amazonas and approximately 897,041 consumers.                                     

For more information, please access the link.

State level

At the state level, we have identified the following ongoing opportunities:

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1.   Concession of Line 15 (Silver) of the São Paulo Metro Network

Object: Concession to provide public transport services for passengers of Line 15 (Silver) of the metro network of São Paulo, with monorail technology, for a period of 20 years. The concession covers the following services: (i) operation of the metropolitan passenger transportation service, between the Vila Prudente and Iguatemi Stations; (ii) maintenance and conservation of all assets linked to and associated with the provision of these services; (iii) implementation of improvements in these assets.

Judgment criterion: Larger fixed grant, with a minimum value of BRL 153.383 million.

Investment: The estimated value of the contract is BRL 4.32 billion, which corresponds to the sum of the nominal value of the estimated revenue during the concession term.

For more information, please access the link.

2.   Disposal of shares of Companhia Energética São Paulo ("CESP")

Object: Disposal of the 327,502,673 shares belonging to CESP in a single lot. The auction will be judged on the basis of the highest unit price paid per share, with a minimum reserve price of BRL 14.30 per share.

For more information, please access the link.

3.   Highways in the State of Mato Grosso - Tangará da Serra Lot

Object: Concession of the provision of public services for the preservation, recovery, maintenance, implementation of improvements and operation of certain sections of state highways for a period of 30 years, namely, of highways MT 246, MT 343, MT 358 and MT 480, totaling 233.20 km.

Investment: The estimated investment amount is BRL 1.5 billion. Also, prior technical studies have recommended a charge of BRL 7.90 per toll plaza.

For more information, please access the link.

Municipal Level

1. Municipalities of the State of São Paulo

1. 1. Ongoing developments in the Privatization Plan of the Municipality of São Paulo

The Municipal Privatization Plan of the Municipality of São Paulo, instituted by Law 16,703/2017, establishes that concessions and permissions for the provision of public services, works and goods will be granted to the private sector.

The objective is to bring together privatizations, concessions and PPP projects with a view to decentralizing decisions and reducing the size of the government; to provide better quality services for the population and prioritize resources for the most sensitive areas such as health, education, safety, mobility and housing.      

1.1.2 Princesa Isabel Bus Terminal

Object: Concession for a period of 35 years for the administration, maintenance, conservation, commercial exploitation and renovation of the Princesa Isabel Bus Terminal and associated enterprises, as well as improvements in the perimeter of the terminal.

Investment: The estimated total value of the contract is BRL 131.9 million, which includes the renovation works, improvements in the perimeter and execution of contractual obligations.

For more information, please access the link.

1.1.3 Municipal Market of Santo Amaro

Object: Concession for 25 years for the recovery, renovation, operation, maintenance and exploitation of the Municipal Market of Santo Amaro in the Municipality of São Paulo. As there were no interested parties in the public session held on September 11, 2018, the request for proposals is being reviewed and the session for the submission of proposals will be rescheduled for a later date.

Investment: The total estimated value of the contract is BRL 87.03 million.

For more information, please access the link.

1. 2. Other projects

1.2.1 Public Lighting – Içara

Object: Administrative concession for a period of 25 years for the provision of public lighting services in the Içara Municipality, including development, modernization, expansion, energy enhancement, operation and maintenance of the municipal public lighting network.

Investment: The estimated value of the agreement is BRL 170.8 million, which corresponds to the sum of the maximum monthly payments, estimated throughout the concession based on constant prices.

For more information, please access the link.

1.2.2 Public Lighting – Bauru

Object: Technical studies as to the economic, financial, legal and environmental feasibility for the structuring of a bid process, the object of which is the modernization, efficiency, optimization, expansion, operation and maintenance of the public lighting network infrastructure in the Municipality of Bauru.

Investment: The maximum amount available for reimbursement of all of the projects, studies, surveys or research, technological solutions, data, technical information or selected opinions, may not exceed 5% of the total estimated value of the investments required to implement the respective Private Public Partnership.

For more information, please access the link

1.2.3 Public cleaning - Municipality of São Paulo

Object: Concession of the public cleaning services and final environmentally appropriate disposal of the resulting waste for a period of 36 months. The concession areas are subdivided into six lots in the Municipality of São Paulo.

Investment: The estimated amount for the execution of the project vary according to the lot: (i) Lot I - BRL 547,000,175.70; (ii) Lot II - BRL 496,201,154.67; (iii) Lot III - BRL 502,121,701.50; (iv) Lot IV - BRL 465,198,596.96; (v) Lot V - BRL 454,648,233.60; (vi) Lot VI - BRL 449,074,142.23

For more information, please access the link.

1.2.4  Graúna Gaivotas Bridge

Object: Preparation of a functional project, a basic project and an executive project for the implementation of the Graúna-Gaivotas Bridge, including connections to the existing road system in the South Region of the City of São Paulo.

Investments: The estimated amount is BRL 5.7 million, which includes the preparation of the projects required for implementation.

For more information, please access the link.

2. Municipality of Rio de Janeiro

2.1 Data network in lighting equipment - RIOLUZ

Object: Concession of complementary public services relating to the data network in shared equipment for the public illumination of the City of Rio de Janeiro, including hardware and software, the use of LED technology and of the concept of "Smart City".     

For more information, please access the link.

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We remain at your disposal for any further clarification regarding this subject.

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