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Reducing Bottlenecks in Infrastructure

Innovative Platforms for Project Preparation Facilities

Institutional Aspects

BNDES Highlights

Founded on June 20th, 1952.

100% state-owned company under private law.

Key instrument for implementation of Federal Government’s

industrial and infrastructure policies.

Main provider of long-term financing in Brazil.

Emphasis on financing investment projects.

Support to micro, small and medium-sized companies.

Support to Export and Internationalization of Brazilian companies.

3

In R$ billion Net Profit

In R$ billion

Assets

BNDES Highlights

4

Project Development Division

Organizational Chart

Director 1 Director 2 Director 3 Director 5 Director 6

Administration

Human Resources Indirect

Operations

AGIR Project

President

Vice-President

Foreign Trade

Advisory Board

President’s Office Executive

Secretary

Director 4

Venture

Capital Basic Inputs

Industrial

Agriculture

Financial International Social Inclusion Information

Technology

Capital

Markets Infrastructure

Risk Management

Economic

Research

Planning

Environmental

Credit

Director 7

Project

Development

Legal

Auditing

6

Needs

• Flow of projects for

approval

• Agility

• Impartiality when

carrying out studies

Brazilian Infrastructure Outlook

Diagnostic

• Gap between investments in infrastructure and the desired growth

• The absence of good projects represents obstacle to investment in infrastructure

• There are no restrictions on private resources for investment in infrastructure

In order to help the efforts to overcome these challenges BNDES decided to

create the Project Development Division 7

Project Development Division attributions

• To foster, structure and coordinate infrastructure projects as part of public concessions and Public-Private Partnerships (PPPs).

• To follow, stimulate and articulate, with entities of Public Administration and International Entities, the establishment of partnerships to structure and model infrastructure projects to verify their feasibility.

8

Fostering and Structuring

Project Development Division

Government

Creation of Project Development Division

• BNDES´s Project Development Divison is responsible for structuring

projects of public concessions and PPPs for Federal Government,

states and municipalities;

• The activity called Project Structuring is meant to be prior to project

deployment and must not be confused with the traditional activity of

BNDES financing to ventures.

Financing

Infrastructure and Social Divisions

Concessionaire

PPP Contract Investment and

service provision

Bidding process

Technical studies and bidding documents

9

Project Structuring : Good Practices on Governance

Absence of Conflict

of Interests

Funding

The studies are

funded with a

success fee paid by

the auction’s winner

Structuring company does not have

interest on participating in the auction

Effective participation beyond the development of feasibility studies

Supporting Procurement Procedure

Stage

Participation in Tender Documents

Preparing and Procurement

Procedure Stage

Align the incentives of the

Government and structuring

company

10

Mechanisms of Projects Structuring

Brazilian PSP Development Program

Project Structuring Fund

(FEP)

Brazilian Project Structuring Company

11

http://www.senaoquesdiz.blogspot.com/

http://www.ifc.org/

• BNDES´s statutory fund of budget applications.

• Objective: To fund studies and researches aimed at guiding public policy,

identifying and developing projects that can provide structuring

investments.

Sector knowledge

Regulatory framework

New and better projects

• Studies:

Exploration and production of Oil & Gas – concluded

Aviation Sector Study – concluded

Restructuring of INFRAERO – concluded

Bioceanic Railway Corridor – concluded

Port Sector Study – concluded

Urban Mobility (Florianópolis) – in progress

Project Structuring Fund (FEP)

12

Fund managed by IFC with resources from multilateral

organizations (IFC and IDB) and BNDESPAR.

• Objective: Focus on innovative projects, involving long-term

contracts, in sectors where the private sector is absent, and

development in new institutional and business environments.

Brazil PSP Development Program

49.96% 16.92%

33.12%

13

http://www.iadb.org/index.cfm?lang=en

Brazil PSP Project Portfolio

BH Basic Health Units (MG)

Forest Concessions – Itaituba I e II (PA)

Suburban Hospital (BA)

Image Diagnostics Center (BA)

Airports Concessions – Confins (MG)

BH Elementary and Infant-school Education (MG)

Airports Concessions – Galeão (RJ)

BA-093 Highway (BA) 14

15

TRADITIONAL INFRASTRUCTURE:

Highways, airports, ports,

public transportation, sewage.

SOCIAL INFRASTRUCTURE:

hospitals, schools and infant-schools.

Brazilian Project Structuring Company (EBP)

• Development of Infrastructure Projects:

• In Partnership with government

• PPPs and Concession Contracts

• Allying public interest and attractiveness

for private investors

• With agility and flexibility of private sector

Brazilian Project Structuring Company (EBP)

• Partners: Banco do Brasil, Banco Espírito Santo, Banco Santander, Banco Votorantim,

BNDESPAR, Bradesco, Citibank, Itaú/Unibanco and HSBC.

• Development of infrastructure projects of public interest and attractive to private investors.

• Projects Portfolio

Ongoing Projects

• Lease of 159 port terminals in Brazilian public ports;

• SP Shopping Circuit;

• SP Parking;

• BH Parking.

• AP-5 Rio Sanitation: contract signed on

January 25, 2012;

• BH Metropolitan Hospital: contract signed

on March 28, 2012;

• BHBus Integration Terminals: contract

signed on March 19, 2012;

• Concession of Airports - contracts signed

for GRU, BSA and VCP - June 2012 and

GIG and CNF: auction date Nov. 22,2013.

• COPASA: contract signed Dec 20, 2013;

• Vitória/ES Sanitation: auction date Oct.

10, 2013;

Concluded Projects

16

PPPs Projects

Mechanisms to structure PPP projects in Brazil

Solicited x Unsolicited Proposals

18

Solicited Proposals

Feasibility Studies

Unsolicited Proposals

Government Initiative Private Initiative

Government structures the

project and then open a

request for proposal.

Project is structured by

private market, government

analyze and then open a

request for proposal.

Planning Project Preparation Project Procurement

(BNDES FEP, PSP and EBP model)

Brazilian Model

Planning Project Preparation Project Procurement

No central

Planning. Pipeline and

priorities are

not clearly

defined.

Governments have low technical capacity

and difficulties to hire independent advisors

in order to develop feasibility studies.

Projects are prepared by potential bidders.

There is no limitation of participants.

Costs are reimbursed if studies are

selected and only if the tender is successful.

Ideal Model: Independent consultancy firms

structuring projects without conflict of

interest. However, market is too risky for

them as they compete with potential bidders

(sunk costs).

Restricted

procedure (pre

qualification rules).

Negotiation is not

allowed.

Clarification

process during

Public Consultation

period.

Unsolicited Proposals (USPs) Competitive Bidding

Solicited Proposals

Government using Public Procurement (8.666 Law)

PSP (IFC+BNDES+BID) and EBP 19

Project Development Division - Results (Solicited Proposals)

20

Total Projects Estimated capex Success Rate*

37 R$ 66 Billions 72%

*Success Rate = Concluded / (Structuring+3yrs + Concluded + Suspended)

Project Development Division - Projects Summary

21

AEP Project

(average)

Number of Proposals Duration

5 1,6

Conclusions:

• Projects had a good level of competition

• Projects were structured in a short period

• There are lessons to learn with projects in municipalities

USPs Success Rate in States

22

Difficulties in concluding USPs Projects and Lack of Competition

Source: PMI nos Estados, PPP Brasil, 2013

Year Total Projects Public

consultation

Procurement

stage

Contract

signed Success Rate

2011 25 13 (52%) 7 (28%) 5 20%

2012 39 6 (15%) 1 (2,5%) 1 2,5%

Total 64 19 8 6 9,4%

All of them had only 1 proposal

at the auction

Maracanã Stadium PPP

23 Source: World Bank (2014). Unsolicited Proposals – An Exception to Public Initiation of Infrastructure PPPs.

Low success rate:

Developing countries – USPs experience

PPPs Projects

Main USP Problems

Analysis – USPs Problems

25

Lack of Government’s

Technical Capacity

Lack of

Competition

Low Success Rate

USP is the main model to structure PPP projects in Brazil and is facing the

following problems:

Lack of Planning

Conflict of Interests and Lack of Transparency are present in Brazil and in other

countries that use Unsolicited Proposals

Source: Hodges, J; Deallacha,G. Unsolicited Infrastructure Proposals, 2007

Difficulties on Hiring

External Advisors

Project

structured

by private

market

PPPs Projects

What are the proposed improvements to unsolicited proposals in Brazil?

Planning for the Future

27

Mid/Long-term Governments Structuring Projects :

In Brazil, projects are being structured by potential bidders due to

governments lack of technical capacity and legal difficulties to hire advisors.

Taking this in consideration there are two big areas for improvement:

• Improving the mechanisms to hire advisors

• Institutional strengthening and capacity building

Short-term Change the regulation of PMIs:

• Create a PMI restricted for independent advisors without conflicts of

interest. Thus, the participation of potential bidders would be

prohibited.

• Competition for the right to develop studies and exclusivity on

developing them.

Thank you!

Henrique A. C. Pinto [email protected]

55 21 2172 8119

www.bndes.gov.br

mailto:[email protected]

Ongoing Projects

Port Leases Program

Blocks and # of leases

(Total of 159)

Block 1 – 52

(Santos & ports from Pará)

Block 2 – 39

(Paranaguá & Salvador/Aratu)

Block 3 – 36

(Suape, Itaqui & ports from N

e NE)

Block 4 – 32

(Vitória, Rio, Itaguaí. Itajaí,

Rio Grande & S. F. do Sul)

25 public ports

2 Port concessions

30

BR-116 MG Highway

• Location: BR-116 from the

BA/MG border to the MG/RJ

border, extending 817 km;

• Concession for 30 years of

operation, maintenance, and

expansion of capacity;

• Granted by the federal

government (ANTT);

• Concessionaire Investment:

US$ 3.0 billion (over 30 years);

• Studies conducted by

BNDES/EBP.

31

Parking Areas in BH

• Project: Concession to construct

underground parking lots in

downtown BH;

• The current parking spaces on the

streets (Blue Lane) will be transferred

to underground parking lots;

• Amount of the investment: US$ 99.5

MM;

• BNDES/EBP studies in partnership;

Parking Lots Capacity

(1) Praça Sete – Tupinambás 397

(2) Hospitalar 748

(3) Savassi Leste – Paraíba 400

(4) Álvares Cabral 358

(5) Barro Preto 421

Total 2.324 32

Parking Areas in SP

• Project: Phase 1: common concession for the construction, maintenance, and operation of 2 parking lots in downtown São Paulo;

• Phase 2: recommendations to re-qualify the parking policy in the city of São Paulo and the concession of 10 additional parking lots;

• Location: São Paulo, SP;

• Creation of new spaces in Phase 1 to meet demand and prioritize the creation of spaces under the park & ride model in Phase 2;

• Amount of the investment: approximately US$ 65 MM on Phase 1 and US$ 200 MM on Phase 2;


• Current status:

• Phase 1: documents waiting publication;

• Phase 2: studies delivered.

• Concluding discussions on policy guidelines for parking lots.

Area under study

33

SP Shopping Circuit

• Project: Concession for the construction, maintenance, and operation of the popular shopping center, shopper support center, drivers and guides, circular transportation of passengers and cargo, bus terminal, parking for busses and automobiles, hotel and commercial towers;

• Location: Downtown São Paulo, SP;

• Daily flow of 523,000 shopping tourists; 21,000 of which are from other cities and states;

• Amount of the investment : US$ 155 MM;


Map of the logistics circuit and functions of

the project

Bom Retiro

Brás

Sé

Santa Ifigênia

Bom Retiro

Brás

Sé

Santa Ifigênia

Parking

Popular Shopping Center

Support centers

Buses to transport

passengers and baggage 34

• Concession allows:

Wood production;

Use of waste wood;

• Concession does not allow:

Access to genetic assets;

Use of water resources above the legally permitted limits;

Exploitation of mineral resources;

Exploitation of fishing resources or wildlife;

Commercialization of carbon credits;

Exploitation of traditional products used or exploited by local communirties for their living.

• > 70% of the Amazon region are public

areas;

• 240 Mha are public forests, 24 Mha

(59.3 M acres) of which are exempt of

any legal restriction for concession;

• FLONAs under study: Itaituba I e II;

• BNDES/IFC studies in partnership;

Forest Concession: sustainable management

35

Concluded Projects

BH Basic Health Units

• Scope: construction, renovation, and management/operation of non-clinical services in the basic BH health network;

• Works: reconstruction of 61 (sixty one) and construction of 19 (nineteen) new Health Centers; construction of 1 Central Sterile Material and 1 Diagnosis Support Unit;

• Services: cleaning, building maintenance, maintenance of equipment and furniture, concierge, and surveillance.

• Estimated Amount of Investment: US$ 130 million;


• Notice and its attachments are awaiting publication to start the bidding process.

37

• Scope: Deploying of Network SERVICES BIOIMAGEM, hierarchical as the complexity of care, linked by resources of TELEMEDICINE AND INFORMATION SYSTEMS, covering the following tests:

• conventional radiology

• mammography

• computed tomography

• magnetic ressonance

• Adequacy of infrastructure of 27 units, and the construction of a central reports;


Image Diagnosis Center - BA

38

BR-101 BA/ES Highway

• Location: BR-101 Highway from

the junction with the BA698

Highway (access to Mucuri, BA)

to the border between ES/RJ,

extending 476 km;





government (ANTT);

• Concessionaire Investment: US$

1.4 billion (over 25 years);

• Auction held on January 18, 2012

(discount in the toll rate of 45%);

• BNDES/EBP studies in

partnership. 39

BR-040 DF/MG Highway

• Location: BR-040 from the

Federal District to Juiz de Fora

(MG), extending 937 km;





government (ANTT);

• Concessionaire Investment:

US$ 3.3 billion (over 30 years);

• Auction date: December 27,

2013;

• Studies conducted by

BNDES/EBP.

40

1

2

3

4

5

6

Highway Concessions

Highway Extension

1 BR-050 GO/MG 437 km

2 BR-163 MT 851 km

3 BR-163 MS 847 km

4 BR-060 BR-153 BR-262

DF/GO/MG 1.177 km

5 BR-040

DF/GO/MG 937 km

6 BR-153 TO/GO 625 km

TOTAL 4.873km

• 6 Concessions for 30 years of operation,

maintenance, and expansion of capacity;

• Granted by the federal government (ANTT);

• Private Investment: ~US$ 13 billion;

• Studies conducted by BNDES/EBP. 41

Rio – West Zone Sanitation

• Project: concession for the construction, and operation of the sanitary waste management system of the AP-5 region of the City of Rio de Janeiro (21 districts in the West Zone);

• 1.8 million inhabitants (56% of collected waste and 4% treated);

• Goals: 80% at 10 years and 90% at 20 years (2.5 million inhabitants);

• Amount of the investment: US$ 940 MM;

• BNDES / EBP studies in partnership;

• Auction held on November 23, 2011 (premium of 8%)

• Contract signed with the Consortium of Brazil Waters and Foz of Brazil on 01/25/2012.

42

COPASA: Water supply

• Project: Concession for the

construction, maintenance, and

shared operation of the Rio Manso

Water Production System (SRM);

• SRM supplies 33% of the RMBH;

• Expansion from 4m³/s to 5m³/s;

• Amount of the investment : US$ 200

million;

• Concession period: 15 years;


• Auction: October 2nd, 2013.

43

BA-093 Highway

• Concession of a system composed

of 6 sections of state highways,

located in metropolitan region of

Salvador, where circulates more than

50% of Bahia’s PIB;

• Extension System BA-093: 125 km;

• Awarded by the State of Bahia

(Derba / AGERBA);

• Amount of the investment: R$ 805

MM (25 years);


• Current Status: auction held on May

3, 2010 and contract signed on

August 17, 2010.

44

Suburban Hospital

• PPP to equip, manage and deliver

health services at the hospital on

behalf of the Government;

• Location: Railroad Suburb, Salvador

(BA);

• Construction of the building of 14,000

m2 made by the State Government in

the amount of R$ 42 MM;

• Beneficiary population: 2 million

people;

• Amount of the investment: R$ 50 MM

(10 years);


• Current Status: auction held on

February 26, 2010 and contract signed

on May 28, 2010.

45

BH Metropolitan Hospital

• Scope: Construction, maintenance

and operation

• Clinical Services are not included in

the object of the concession


million;

• Concession Period: 20 years


• Contract signed in April, 04, 2012

46

BH Elementary and Infant-school Education

• Scope: Construction and operation of

Non-Pedagogical services of 32 UMEIs

and 5 Elementary Schools;

• UMEI: 440 children (ages 0 to 5) –

Municipal Project recognized as “high

level”;

• EF: 960 students (ages 6 to 14);

• Concession period: 30 years

• Concessionaire Investment: US$ 98 MM;


• Current Status: auction held on June 06,

2012 and contract signed on July 25,

2012.

Infant-school

Elementary School - EF 47

BH Bus Terminal

• Project: Concession to construct and

operate the new Bus Terminal (Inter-

city and inter-state arrivals and

departures);

• Location: the North Region, new

development area for the city;

• 426,000 passengers/month (2012);


• Amount of the investment: US$ 36,5

million (US$ 61 million with accessory

construction);


• Auction held on December 22, 2011

(premium of 409%).

São

Gabriel

Terminal

48

Belo Horizonte Stadium

• Scope: Refurbishment and operation

of Belo Horizonte Stadium


million;

• Concession Period: 27 years


• Contract signed in December, 21,

2010 49

S. Gonçalo do Amarante Airport (RN)

• Objective: concession of the new

international airport in Rio Grande do

Norte, 18 km from Natal;

• The current airport, Augusto Severo,

will function as an air force base;

• Pre-existing construction: the runways

and apron are being completed by

INFRAERO, through the Army

Construction Battalion;

• Investments: US$ 353 MM, including

passenger terminal, cargo, equipment,

basic infrastructure etc;

• Auction (August 22th, 2011): Highest

bid of US$ 100 MM (228% over the

initial bid of US$ 30,5 MM).

50

Guarulhos International Airport - SP

• Project: Renovation and expansion of

the Guarulhos International Airport;

• INFRAERO’s share: up to 49% of the

voting shares of the future SPE;

• Traffic in 2011: 26.7 million pax;

• Estimated traffic in 2031: 54 million pax;

• Period of concession: 20 years;

• Estimated investment: US$ 3,7 bn;


• Auction held in February 6, 2012;

• Winning bid - 376% premium. 51

Brasília International Airport (DF)


the Brasília International Airport;





• Period of concession: 25 years;

• Estimated investment: US$ 2,1 bn;




Campinas Airport (SP)


the Campinas Airport (Viracopos);





• Period of concession: 30 year;

• Estimated investment: US$ 6.8 bn;





• Estimated capex: R$ 5 bi

• 2012 traffic: 17,5 million annual passengers (MAP)

• 4,3 MAP – international passengers

• 11,2 MAP – domestic passengers

• Domestic traffic grew at a CAGR of 13 % in the last 5 years

• International traffic grew at a CAGR of 17% in 2012

• Estimated traffic for 2038: 60,3 MAP (19% international)

• Auction date: November 27nd 2013

Galeão International Airport (RJ)

54


• Estimated capex: R$ 3 bi

• Traffic in 2012: 10,4 million annual

passengers (MAP)

• 0,4 MAP – international passengers

• 10 MAP – domestic passengers

• Traffic grew at a CAGR of 13% in the

last 3 years

• Estimated traffic for 2043: 43,3 MAP

(~10% international)

• Auction date: November 27nd 2013

Confins International Airport (MG)

ES Sanitation

• Scope: Administrative Concession for the expansion, maintenance and operation of a sewage system;

• Concession term: 30 years, with possibility of a 5 years extension;

• Location: Serra / ES;

• Pop.: 409,000 inhabitants;

• Sewage coverage and client adherence:

• Current 50% with 60% of adherence;

• Target: 90% coverage at the end of

the 20th year, with 95% of clients

connected;

• Estimated Investment: US$ 175 MM;

• BNDES / EBP studies in partnership;

• Auction date: October, 10th , 2013

Sewage system in

Espírito Santo

Espirito Santo area: 46,184 sq.km

Denmark area : 43,098 sq. Km

Serra area : 553.25 sq. km 56

57

Terms of reference

for studies

Invitation for

studies

Studies delivery to

government

Studies analysis Publication of PMI

results

Final preparation of

the bidding

documents

Public consultation Project

adjustments Publication of

bidding documents

Auction Contract Signature

Studies elaboration

by participants

Studies selection

Brazilian Model – Unsolicited Proposals (USPs)

Stage 1:

Invitation for

Studies

Stage 2:

Before

launching

tender

Stage 3:

Project

Procurement

(Bidding

Process)

Project Preparation

Annual Disbursements (R$ X US$)

58

Thank you!

Henrique A. C. Pinto [email protected]

55 21 2172 8119

www.bndes.gov.br

mailto:[email protected]

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