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Investment Partnerships Program - PPI

PPI: the task force that has been successful!

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15 de agosto de 2017

PPI: the task force that has been successful!

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A little more than a year since the Investment Partnership Program (PPI) was created, 54% of projects were already concluded. After the second meeting of PPI Board, held in April, the list of projects, today comprising 89 undertakings, became robust. The electric sector, for example, was included in the Program portfolio with 35 lots of transmission lines across 20 Brazilian states, and 48 projects were auctioned, including renewals, early extensions, and privatization of Celg D (Goiás). The estimate of investments agreed upon in auctions exceeds R$ 23 billion. With regard to grants, deliveries already made sum up R$ 6 billion.

The agenda for the second semester 2017 will keep on being intensive to the PPI team, comprising experts in infrastructure, finances, and engineering. Auctions and edicts are being scheduled and will further leverage Brazilian economy. The gas & oil sector is an example: the 2nd Production Sharing Round and the 14th Exploratory Blocks Bidding Round auctions are already scheduled.

The 14th Round auction, intended to encourage the participation of small and medium national companies, is scheduled for September 27. The 2nd Round, on the other hand, intended to use more efficiently the Country’s natural resources, is scheduled to October 27. The expected grants will foment the sector growth by responding to the local demand for goods and services, job generation and income distribution. 

The port sector also brings good news: the edicts for Vehicles Terminal in Porto de Paranaguá PAR 12 and Cellulose Terminal in Porto de Paranaguá PAR 01 will be launched on November 20, along with the edict for the General Cargo Terminal in Porto de Itaqui/MA (IQI 18).

With regard to highways, two edicts are expected for the second semester 2017. The bidding of BR 364/365, important agro-industrial production flow corridor in Goiás southeast and Triângulo Mineiro, will involve R$ 2 billion in investments. It will be a 30-year grant and the winning company will have to double lanes, offer medical services and mechanical assistance, among others. Going towards the south, South Integration Highway (RIS) will bring significant improvements to some sections of the country’s south region, like reduction in the number of accidents and traffic jams. The public consultation of this project was extended for three months, because there was a strong popular participation – which shows expressive gains for this undertaking. The edict will be published in December. 

The railway sector, on the other hand, the EF-151, also known as North-South Railway, designed to become the backbone of railway transportation in Brazil, will have its edict launched in December, as well. The objective is to strategically integrate the national territory and so contribute to reduce the logistic cost of cargo transportation. It will represent over R$ 2 billion in investments and minimum grant of R$ 1.63 billion.

Ferrogrão Railroad (EF-170), a greenfield project, will have its public consultation open in September. Investments expected are estimated in R$ 12.6 billion. The MRS extension is in progress and will open its public consultation in October. Rumo Malha Paulista concessionaire, in its turn, is adjusting the Business Plan to renew Malha Paulista.

The auction of Volta Grande, Miranda and São Simão plants will put in motion the hydroelectric sector. The edict publication is expected for August. The minimum grant exceeds R$ 9 billion and investments will represent R$223.23 million.

Retrospective – Created in May 2016, via Provisional Act 727, converted into Law nº 13.334/2016, the Program established a chronogram that has been strictly followed since its creation. The concession of undertakings qualified by PPI will generate over 120 thousand jobs per year of concession.

In addition to generating legal security, all actions have as principle legal predictability and security, providing investors with warranty that rules will not be changed along the way.
The first semester of 2017 has leveraged investments and the market trust has increasingly attracted new national and foreign companies. In the electric sector, the transmission lines auction, in April, was successful: 31 lots were acquired. In the gas & oil sector, the auction of the 4th Marginal Accumulations Round, on May 11, raised almost R$8 million in signature bonus.

In the port sector, two auctions were held in March this year (STM 04 and STM 05 Terminals in Porto Organizado de Santarém, Pará). The Wheat Terminal auction in Rio de Janeiro was also included in the account. With a grant value of R$ 1.180 million, Maravilha consortium won the bidding and will invest throughout the contract period R$ 93.1 million in works to modernize and expand the terminal, with the construction of a warehouse with static capacity of 35 thousand tons.

With regard to the airport sector, four airports were auctioned (Fortaleza, Salvador, Porto Alegre and Florianópolis), on March 16, at BMF BOVESPA. Considering grants alone, the Union will receive R$ 3.72 billion, due to the dispute involving three European operators. 

In the privatization area, the Companhia Energética de Goiás (Celg) auction, for example, received a bid of R$ 2.2 billion – 28% agio, consequence of the edict re-adequacy to Projeto Crescer guidelines. The earlier attempt had failed.

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