BrazilPAC’s Investment Opportunities

ROBERTO GARIBESpecial AdvisorStaff House of the Presidency of the RepublicStaff House of the Presidency of the Republic

PAC’S INVESTMENTSPAC’S INVESTMENTS

CPAC – Growth Acceleration Program

In 2007 – PAC 1To accelerate the pace of economic growth

T i l t d i tTo increase employment and income ratesTo decrease social and regional inequalitiesTo overcome infrastructure bottlenecks To overcome infrastructure bottlenecks

In 2009, a new functionTo reduce the impact of the international economic crisis –countercyclical policy

In 2010, a new stage: PAC 2 – 2011-2014

S f i d Set of measures aimed at:To encourage private investmentsTo remove bureaucratic, administrative, regulatory, legal and legislative

b t l t thg y g g

obstacles to growthTo increase public investments in infrastructure

GROWTH ACCELERATION PROGRAM –GROWTH ACCELERATION PROGRAM PAC 1, 2007-2010

Infrastructure projects in three areasInfrastructure projects in three areas€ billion

Area 2007-2010 After 2010 TOTAL

LOGISTICS 43.3 23.0 66.3 POWER G&T 136.6 341.7 478.3

SOCIAL AND URBAN 116 8 14 3 131 2 SOCIAL AND URBAN 116.8 14.3 131.2

TOTAL 296.8 379.0 675.8

GROWTH ACCELERATION PROGRAM –GROWTH ACCELERATION PROGRAM PAC 2, 2011-2014

Preliminary investment forecast€ billion

Axes 2011-2014 After 2014 TOTAL

€ billion

PAC BETTER CITY 25.8 - 25.8 PAC COMMUNITY WITH CITIZENSHIP 10.4 - 10.4 CITIZENSHIPPAC MY HOUSE, MY LIFE 125.8 - 125.8 PAC WATER AND LIGHT FOR ALL 13.8 - 13.8 C G O 13.8 13.8 PAC TRANSPORTS 47.2 2.0 49.3 PAC ENERGY 208.7 283.4 492.1

TOTAL 431.8 285.5 717.2

INVESTMENT OPPORTUNITIES:INVESTMENT OPPORTUNITIES:

RAILROADS

AIRPORTS

URBAN MOBILITYURBAN MOBILITY

PORTS

RAILROADSRAILROADS

RAILROADS INVESTMENT O O SOPPORTUNITIES

RAILROAD CONCESSION PROGRAM

P ti i ti i bli biddi

PROGRAM

Participation in public bidding processes• North-South Railroado t Sout a oad• East-West Integration Railroad• High-Speed Rail

NEW CONCESSION AND USAGE MODEL FOR NEW RAILROADS – In study by the GovernmentRAILROADS In study by the Government

Separation of Infrastructure and Operations:Separation of Infrastructure and Operations:• VALEC is the Concessionaire for the North-South, East-West

Integration and Midwest Integration RailroadsIntegration and Midwest Integration Railroads• The infrastructure management would be under VALEC’s

responsibility, and totally separated from the operation• A third party, non-concessionaire, logistics operator or user

would be entitled to travel by the existing railroad concessions by paying rates by paying rates

• Would be established a preset number of tracks to suit its needs

NORTH-SOUTH RAILROAD – SOUTH SECTIONSECTION

33% f B il’ i lt l d ti • 33% of Brazil’s agricultural production • 72% of agricultural land• Large mineral reserves• Outflow of the agro-industrial and mineral

production to four ports

Length: 1 525 kLength: 1,525 kmInvestment: € 2,2 billionInvestment: € 2,2 billion

P t f It i/MA

Port of Vila do Conde /PA

Port of Itaqui/MA

Palmas/TO

Anápolis/ GO

Estrela D’Oeste/SP

Port of Itaguaí/RJ

Port of Santos/SPPort of Santos/SP

EAST-WEST INTEGRATION RAILROADEAST-WEST INTEGRATION RAILROAD

• Outflow of the agricultural and mineral gproduction

• Waterway integrationy g

L th 1 527 kLength: 1,527 kmInvestment: € 1,7 billion,

São Francisco Waterway

Figueirópolis/TO

Ilhéus/BA

HIGH-SPEED RAILS PLANNED

PAC 1Campinas-São Paulo-Rio de Janeiro98 km + 413 km: 511 km

PAC 2 – On studyy•Curitiba-São Paulo: 461 km•São Paulo-Belo Horizonte: 559 km•Campinas-Uberlândia: 540 km

Uberlândia

HIGH-SPEED RAIL - HSRPROPOSED STATIONS

• Most populous region (36 million inhabitants) and the most developed economically(45% f GDP) f B il(45% of GDP) of Brasil

• Rio de Janeiro-São Paulo: 450 km in 93 minutes• São Paulo-Campinas: 100 km in 30 minutes

HIGH-SPEED RAIL – HSRProject scope

• Estimated investment: €15.7 billion• Deadline for entry into operation: 2016

Announcement published onJuly 13, 2010• Deadline for entry into operation: 2016

Concessionaire responsible for the design, construction, operation and maintenance complying with technical performance parameters;

y

maintenance, complying with technical performance parameters;Auction to be open to all existing technologiesCompulsory technology transferPublic sector participation: own capital and financingPublic sector participation: own capital and financingDocumentation available at www.tavbrasil.gov.br

• Technical studies on demand, alignment, geology, operation and economic-financial Technical studies on demand, alignment, geology, operation and economic financial modeling completed and available

Concession auctionNovember, 2010

HIGH-SPEED RAIL – HSRTransport Matrix 2008 Transport Matrix, 2008

Thousand passengers per yearWithout HSRModal RIO - SÃO PAULO RIO - CAMPINAS REGIONAL TOTAL

Plane 4,414 275 - 4,689Car 1,207 87 15,770 17,064Bus 1,687 121 10,039 11,847, , ,Total 7,308 483 25,809 33,600

With HSRt SHSR - Economy 2,648 251 17,069HSR - Executive 871 51 922

HSR - Total 3.,19 302 14,170 17,991

14,170-

HSR Total 3.,19 302 14,170 17,991Plane 2,368 101 0 2,469Car 751 31 8,108 8,890Bus 670 49 3,531 4,250Bus 670 49 3,531 4,250Total 7,308 483 25,809 33,600

HIGH-SPEED RAIL – HSRDemand ForecastingDemand Forecasting

DEPARTURE ARRIVAL 2008 2014 2024 2034 2044EXPRESS SERVICES 3,821 7,070 11,282 19,323 27,788

Rio de Janeiro São Paulo 3,519 6,435 10,201 17,348 24,948Rio de Janeiro Campinas 302 635 1 081 1 975 2 840Rio de Janeiro Campinas 302 635 1,081 1,975 2,840

REGIONAL SERVICES 14,170 25,538 34,777 49,774 71,577

Rio de JaneiroV. Redonda/B. Mansa 1,017 2,619 3,271 4,211 6,055

S.J. dos Campos 84 211 294 422 606

V. Redonda/B. MansaS.J. dos Campos 44 254 337 457 657

São Paulo 88 184 233 308 443Campinas 15 40 55 79 113

S.J. dos CamposSão Paulo 4,959 8,553 11,490 16,282 23,415Campinas 598 1,305 2,003 3,110 4,473, , , ,

São Paulo Campinas 7,365 12,372 17,094 24,905 35,815TOTAL 17,991 32,608 46,059 69,097 99,365

HIGH-SPEED RAIL – HSRRevenue Forecasting

DEPARTURE ARRIVAL 2014 2024 2034 2044€ million

Revenue Forecasting

EXPRESS SERVICES 663.67 1,058.41 1,823.69 2,622.59Rio de Janeiro São Paulo 597.27 948.13 1,622.46 2,333.23Rio de Janeiro Campinas 66.40 110.27 201.23 289.36

REGIONAL SERVICES 392.32 534.42 764.18 1,098.92

Rio de JaneiroV. Redonda/B. Mansa 47.87 59.78 76.95 110.64

S J dos Campos 9 82 13 69 19 59 28 18S.J. dos Campos 9.82 13.69 19.59 28.18

V. Redonda/B. MansaS.J. dos Campos 7.91 10.49 14.19 20.41

São Paulo 8.14 10.37 13.64 19.59Campinas 2 14 2 95 4 22 6 08Campinas 2.14 2.95 4.22 6.08

S.J. dos CamposSão Paulo 111.95 150.08 213.13 306.50Campinas 29.04 44.64 69.27 99.59

Sã P l C iSão Paulo Campinas 175.46 242.42 353.19 507.90TOTAL 1,056.00 1,592.82 2,587.87 3,721.50

HIGH-SPEED RAIL – HSRTrack description

Ch t i ti

Track description

Characteristics• Gauge: 1,435 mm• Maximum speed: 350 km/hMaximum speed: 350 km/h• Minimum horizontal radius: 7,228 m• Minimum vertical radius: 42,875 m

M i di t 35 /• Maximum gradient: 35 mm/m• Axle load: 17t • Minimum platform: 500 m

Reference route• Length: 510 8 km• Length: 510.8 km• Tunnel: 90.9 km (18%)• Bridge: 107.8 km (21%)

O f 312 1 k (61%) • On surface: 312.1 km (61%)

HIGH-SPEED RAIL – HSRStudiesStudies

Environmental Studies• The route considered the social and environmental constraints identified• Terms of Reference for EIA / RIMA defined• ANTT will conduct an environmental impact study in order to obtain the license

to begin the HSR’s constructiong

Geological-Geotechnical StudiesG l i l i f th f t l t d• Geological mapping of the reference route completed

• Geological survey and laboratory tests of the samples taken completed

HIGH-SPEED RAIL – HSRInvestments

€ (000)

Investments

Earthmoving 1.003.954,1 6,4Item Investment 2009 %

Artworks 8.252.281,5 52,4Buildings and equipments 644.445,9 4,1Signalling and Telecomm nications 286 726 5 1 8Signalling and Telecommunications 286.726,5 1,8Permanent Route 972.037,7 6,2Environmental Measures 1.770.027,2 11,2Environmental Measures 1.770.027,2 11,2Electrification 618.799,4 3,9Trains 1.245.356,1 7,9Additional Services 946.282,6 6,0TOTAL 15.739.911,2 100,0

HIGH-SPEED RAIL - HSRFinancial Modeling – General assumptions

Demand and Revenue: Studies made by HalcrowTaxes exoneration: REIDI and ICMS PIS and COFINS exemption

Financial Modeling General assumptions

Taxes exoneration: REIDI, and ICMS, PIS and COFINS exemptionInvestment:

• 5 years• R$34,6 billion

Term of Concession: 40 yearsGovernment’s direct financing:Government s direct financing:

• Interest Rate: TJLP + 1%• Term: 30 years• DSCR: 1.2

IRR • For the project: 5.7%For the project: 5.7%• For the stockholder: 9.2%

Leverage level: 70% / 30%$ $Public participation (ETAV): US$0.6 bi (own capital) + US$1.3 bi

(expropriation)

TREM DE ALTA VELOCIDADE - TAVHIGH-SPEED RAIL - HSRConcession model

Legal model: common concession paid with extraordinary

Concession model

Legal model: common concession paid with extraordinary revenues and tariffs

Object: public high-speed rail concession preceded by the infrastructure construction

Term: 40 years

T iff t i ili dj t d b IPCA ith i i Tariff system: price ceiling adjusted by IPCA with pricing freedom, provided the following condition is respected:

• Price ceiling for Economy Class: €0 2 per km in the Rio de Janeiro - São Paulo • Price ceiling for Economy Class: €0.2 per km in the Rio de Janeiro - São Paulo direct connection

AIRPORTSAIRPORTS

AIRPORTS GuidelinesTo provide for the airports a structure suitable for:

• Ensuring quality care and users’ comfortM t th i i th j t d d d• Meet the increase in the projected demand

Improving the conditions for operational safety:Improving the conditions for operational safety:• Lane, yard, control tower• Technological upgrade of the operating systemsTechnological upgrade of the operating systems

Total: 13 airportsTotal: 13 airports

AIRPORTSHistorical DemandHistorical Demand1997 : 0.3 passengers carried per capita (163.8 million)

After 2003: growth of 10% on passengers carried per capita

2008 : 0.6 passengers carried per capita (189.6 million)

13131296

111102

113Number of passengers: Million boardings + landings + connections 10% pa

5959

10

1311

1099109

82717574686363

55

4% pa 59%59%

10010

9890837161666558545344

91155

44

050403020100999897 06 0807DomesticInternational

Source: EMBRATUR

HOST CITIES AIRPORTS

Airport

R$ Million, Preliminary

Investment

Belo HorizonteBrasíliaCuiabá

• Responsibility Matrices sent to host

408.6748.487 5

Sittuation

CuiabáCuritibaFortaleza

cities

• Goal: sign up the Matrices until July 19, 2010

87.572.8

279.5ManausNatalPorto Alegre

327.4568.9*345.8

RecifeRio de JaneiroSalvador

19.8687.345 1Salvador

São PauloTotal

45.11,961.45,552.5 Considering Guarulhos

(R$1,219.4 million) and Vi (R$ 742 illi )

* Includes R$ 400 million from concessionaire’s investment

Viracopos (R$ 742 million)

HOST CITIES AIRPORTSOperating modules

R$ Million

Operating modules

Airport Amount (R$ Million) Size (m2) Current operating

capacity (million) Capacity increase

(million) Opening Ending

Brasília 4 0 1 500 8 0 Balancing to improve August, June 2013

Campinas 5.0 1,200 3.5 2.5 October, 2010 July, 2013

Brasília 4.0 1,500 8.0 g pthe comfort level

g2012 June, 2013

Guarulhos 32.5 14,000 25.0 3,.0 February, 2011

December, 2011

Guarulhos 23.2 10,000 25.0 2.5 August, 2012 June, 2013

AIRPORTS INVESTMENT O O SOPPORTUNITIES

AIRPORTS CONCESSION PROGRAMPROGRAM

Participation in public bidding processes• São Gonçalo do Amarante Airport

SÃO GONÇALO DO AMARANTE AIRPORTAIRPORTConcession to operate the São Gonçalo do Amarante Airport at the State of Rio Grande do Norte.

Airport fees from the concessionaire limited by ANAC

Fees adjusted annually by a consumer price index and revised ordinarily every five years in order to preserve the

i d fi i l b l f th t teconomic and financial balance of the contract

SÃO GONÇALO DO AMARANTE AIRPORTAIRPORTThe higher value offered by the grant wins

P hibit dProhibited• Participation of air transport services companies, directly or indirectly, on the

voting capital of the concessionaire in a percentage equal to or greater than voting capital of the concessionaire in a percentage equal to or greater than ten percent

• Participation of the concessionaire or its shareholders, directly or indirectly, on the voting capital of companies providing air transport services in a g p p p g ppercentage equal to or greater than ten percent

Demand projection – million passengers per yearDemand projection million passengers per year• 2010 – 2.0 • 2020 – 4.7 • 2030 – 7 9 2030 7.9 • 2045 – 15.6

SÃO GONÇALO DO AMARANTE AIRPORT I t t R lt

Investment cycles in a horizon of 35-years concession

Investment – Resultsy y

180.000

200.000

120.000

140.000

160.000

80.000

100.000

20 000

40.000

60.000

-

20.000

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

2032

2034

2036

2038

2040

2042

2044

Source: ANAC / BNDES

350.3 MM 195.2 MM 129.3 MM

SÃO GONÇALO DO AMARANTE AIRPORTK I t tKey Investments

Passenger Terminal 192 408Passenger Terminal 192,408Infrastructure Systems 54,151

Flight Protection Systems 45 148Flight Protection Systems 45,148Environmental Investments 31,473

Oth I t t 27 192Other Investments 27,192Total 350,371

URBAN MOBILITY URBAN MOBILITY PAC 1PAC 1

URBAN MOBILITYS bSubways

State City Amount€ Million

State City AmountCE Fortaleza 385,5 RJ Rio de Janeiro 216,2 RJ Rio de Janeiro 216,2 SP São Paulo 994,4 MG Belo Horizonte 16,0 ,BA Salvador 295,0 PE Recife 177,4 RS Porto Alegre 323,3

2.407,7 TOTAL

URBAN MOBILITYURBAN MOBILITYPAC 2PAC 2

URBAN MOBILITYG id liTo improve the public transportation systems in major urbanGuidelinesTo improve the public transportation systems in major urbancenters

Subway, LRT, BRT and bus lanes

Better public transportationBetter public transportationReduced travel timeIncreased quality of life on major cities

Investment*€ billion

InvestmentUnion Budget 2.7

Financing 5.4 gTOTAL 8.1

*Does not includes counterparts

URBAN MOBILITY URBAN MOBILITY WORLD CUP 2014WORLD CUP 2014

WORLD CUP 2014 – HOST CITIES

Fortaleza

NatalManaus

Recife

CuiabáSalvador

Belo Horizonte

Brasília

Cuiabá

Belo Horizonte

São Paulo Rio de JaneiroCuritiba

Porto Alegre

RESPONSIBILITY ASSIGNMENT MATRIX

PortsIssue Responsible

PortsPassenger Terminals Federal Government

AirportsPassenger Terminals and Lanes Federal Government

Stadiums Construction, reform and maintenance States and Municipalities Federal

Urban Mobility States and Municipalities Government

support through

financing

Hotels Private sectorg

URBAN MOBILITYProjects selection criteria:• Attending the public transport system• Directly related to the World Cup: to improve the access to the y p p

stadium, hotel zones, airports, ports and/or bus stations• Having preliminary / executive designs • Complying with the World Cup schedule• Connecting different transport modes – Intermodality• Having a defined operator

URBAN MOBILITY FINANCING

Pró–Transporte program:• Amount: € 4.1 billion through FGTS• Deadline: 4 years of grace period after signing the contracty g p g g

20 years to repay after the grace period (30 years for public rail transport)

• Scope: Light Rail Vehicles (LRVs) Monorail and Bus Rapid • Scope: Light Rail Vehicles (LRVs), Monorail and Bus Rapid Transit (BRT)

URBAN MOBILITYS M d lSummary per Modal

Modal Qty Project Value FinancingS b 2 15 8 15 0

€ Million

Subway 2 15,8 15,0 Bus Terminals 3 29,0 28,0

Monitoring 3 51,0 50,6 g , ,VLT 2 284,6 240,1

Bus Corridors 18 875,1 821,0 M il 2 1 883 9 760 4 Monorail 2 1.883,9 760,4

BRT 20 2.104,2 1.613,6 Total 50 5.243,5 3.528,7 Total 50 5.243,5 3.528,7

URBAN MOBILITYSummary WorksheetSummary Worksheet

€ Million

N t l 2 185 9 163 2

Host City Qty Project Value Financing Value

Natal 2 185,9 163,2 Brasília 1 164,6 163,2

Fortaleza 7 254,1 187,4 C itib 9 201 6 199 2 Curitiba 9 201,6 199,2 Cuiabá 3 217,6 205,6

Porto Alegre 10 237,3 220,8 Salvador 1 256,7 244,9

Recife 5 321,9 293,0 Manaus 2 694,9 361,7

Belo Horizonte 8 688,1 462,6 São Paulo 1 1.293,0 489,2

Rio de Janeiro 1 727,9 538,0 TOTAL 50 5.243,5 3.528,7

PORTSPORTS

PORTS

C l t i t t t PAC• Complementary investments to PAC• Focus on passengers terminalsp g• Host cities with projected deficit in number of beds

PORTS EXTENSION AND MODERNIZATIONR$5.1 billion

Docks, piers, terminals, dredging and land accessDebureaucratization of port operationsPassengers Terminals for the World Cup 2014

Reduced logistics costsBetter operating efficiency on portsIncreased competitiveness from the Brazilian exportsIncreased competitiveness from the Brazilian exportsEncouragement to private investments

48 VENTURES 21 PORTS R$5 1 billi48 VENTURES – 21 PORTS - R$5.1 billion

Ventures QuantityyDredging for Deepening 12Port Infrastructure 24L i ti I t lli 5Logistics Intelligence 5Passengers Terminals – World Cup 2014 7

PORTSPort Estimated value

(R$ Million) Project Description

Salvador 36 0 To adapt the Warehouse for a Passengers Ferry Terminal, paving / Salvador 36,0 urbanizing the accesses and the parking lot

Recife 21,8 To adapt the Warehouse and to build a new area for a Passengers Ferry Terminal, paving / urbanizing the accesses and the parking lot

Natal 53,7To adapt the old Fridge and Shed for a Passengers Ferry Terminal, expanding the pier and paving / urbanizing the accesses and the

parking lotFortaleza

(Mucuripe) 105,9 To build the Passengers Ferry Terminal and pier / cradles, paving / urbanizing the accesses and the parking lot

Santos 119 9 To align the pier and to develop an internal access roadSantos 119,9 To align the pier and to develop an internal access road

Rio de Janeiro 314,0 To build three piers

Manaus 89,4 To adapt the Warehouses for a Passengers Ferry Terminal, expanding the pier, defenses, urbanizing the parking lot and building a covered

pedestrian walkway

TOTAL 740,7

BrazilPAC’s Investment Opportunities

ROBERTO GARIBESpecial AdvisorStaff House of the Presidency of the RepublicStaff House of the Presidency of the Republic