Associao Brasileira da Infraestrutura e Indstrias de Base
Associação Brasileira da Infraestrutura e Indústrias de Base BUSINESS OPPORTUNITIES IN INFRASTRUCTURE AND THE WORLD CUP 2014 Seoul – South Korea September 17, 2009 FLAVIO MACHADO FILHO Director of International Relations
ABDIB’s AREA COVERAGE INFRASTRUCTURE AND BASIC INDUSTRY ELECTRICAL POWER OIL, GAS AND PETROCHEMICAL TRANSPORT SANITATION PAPER/PULP STEEL MINING TELECOM 2
INTERRELATED AREAS GOODS AND SERVICES FOR INFRASTRUCTURE AND BASIC INDUSTRY ENGINEERING SYSTEMS / EQUIPMENTS CONSTRUCTION ASSEMBLY OTHER SERVICES INVESTORS OPERATORS 3
ABDIB MEMBER COMPANIES MEMBERS 144 REVENUE 2008 172 US$ BILLION (15% GDP) EMPLOYEES 318, 000 4
ABDIB PERMANENT AGENDA REITERATE IMPORTANCE OF PRIVATE CAPITAL PARTICIPATION IN INFRASTRUCTURE CLEAR AND STABLE INSTITUTIONAL RULES CONSOLIDATE REGULATION AGENCIES WITH AUTONOMY AND INDEPENDENCE DEFINE A SET OF STRUCTURING PROJECTS CREATE ALTERNATIVE MECHANISMS TO ATTRACT FINANCING AND INVESTMENT 5
INFRASTRUCTURE: REGULATION ENVIRONMENT AND CURRENT AND REQUIRED INVESTMENT 6
CURRENT LEGAL AND REGULATION ENVIRONMENT ü Concession Rules (Law 8, 987/1995) ü Regulation Agencies § 7 Agencies at Federal Level (Telecom, Electric Power, Oil & Gas, Ground Transport, Water Transport, Air Transport, Hydro resources) § 21 agencies at state level and § 5 at municipal level ü PPP – Public Private Partnerships 7
CURRENT LEGAL AND REGULATION ENVIRONMENT CONT’D üSpecific Rules for each infrastructure sector ü Arbitrage ü Private Equity Infrastructure Funds – “FIPs” § Federal Instructions 8
EVOLUTION OF CURRENT INVESTMENT IN INFRASTRUCTURE US$ Billion 2008 PRICES 2008 prices : Figures updated by using IPCA indicator over the period 1 US$ = 1. 97 R$ 9
CURRENT INVESTMENT IN INFRASTRUCTURE (2003 / 2008) Public & Private (Share % ) 10
ANNUAL INVESTMENT REQUIREMENT IN INFRASTRUCTURE US$ Billion ELECTRIC POWER 14. 4 OIL AND GAS (*) 38. 2 TRANSPORT/ LOGISTICS 12. 2 BASIC SANITATION 6. 9 TELECOMMUNICATIONS (**) 10. 0 TOTAL 81. 7 Notes: Requirement valid for the next 5 years (*) E&P, downstream, Gas and Energy (**) Fixed and mobile telephony 1 US$ = 1. 97 R$ 11
SECTOR CHALLENGES AND OPPORTUNITIES ELECTRIC POWER 10 -years Plan (2008 – 2017) Segment Generation Transmission US$ Billion Hydro Plants 43, 053 MW Thermo Plants 6, 621 MW Transmission lines 36, 388 Transformation capacity 71, 357 MVA Km Total US$ Billion 67. 5 4. 6 72. 1 12. 7 7. 1 19. 8 91. 9 Note: for Distribution, a projected investment of US$ 4 billion/year Source : EPE 12
SECTOR CHALLENGES AND OPPORTUNITIES RENEWABLE ENERGY ü A total of 156 projects (3, 299. 40 MW) were selected and contracted by Eletrobrás, distributed as follows: Small Hydroelectric Plants (< 30 MW) Projects MW 63 1, 191. 24 Biomass Projects MW 27 685. 24 Wind Power Projects MW 54 1, 422. 92 13
SECTOR CHALLENGES AND OPPORTUNITIES OIL and GAS INVESTMENT REQUIREMENT FOR E&P, DOWNSTREAM, GAS AND ENERGY (2009 -2013) US$ Billion Petrobras 153. 2 Private Investors Total 35. 6 188. 8 Source: Petrobras, ABDIB, IBP 14
PRIVATE PARTICIPATION OIL AND GAS ANP TENDER ROUNDS 1999 / 2008 Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Round 1 2 3 4 5 6 7 8 9 10 Tendered 27 23 53 54 908 913 1, 134 * 271 10 3, 513 Awarded 12 21 34 21 101 154 251 * 117 54 711 New Agents 10 12 11 7 2 5 13 * 19 6 78 Blocks Note: (*) 8 th. Round (2006) fully suspended ANP is the Regulatory Agency for Oil & Gas 15
SECTOR CHALLENGES AND OPPORTUNITIES TRANSPORTATION Projected investment of National Transportation and Logistic Plan 2008 - 2023 Sectors Total Estimate (US$ Billion) Roadways 40. 6 Railways 30. 7 Ports 13. 2 Airports 15. 2 Waterways and River Harbors Total 6. 5 106. 2 16
INFRASTRUCTURE PROFILE TRANSPORTATION AIRPORT MODALITY - 2008 ü Infraero is a state-owned national company that: § Manages • 67 airports • 32 load terminals • 80 units in support of air navigation § Transports • Approx. 110 million passengers • Approx. 1. 3 million tons. of load (imports, exports and domestic) • Approx. 97% of regulated air transport in Brazil 17 Source: Infraero
SECTOR CHALLENGES AND OPPORTUNITIES BASIC SANITATION Annual investment requirement for the next years Segment (US$ billion/year) Water 2. 5 Sewage Collection 3. 1 Sewage Treatment 1. 3 Total 6. 9 Notes: 1) Investment required to universalize services in 20 years. 2) Represents 0, 60% GDP 3) Average Investment: § 1991 -94 –> 0, 13% GDP § 1995 -00 -> 0, 25% GDP § 2001 -04 -> 0, 18 % GDP 18
SECTOR CHALLENGES AND OPPORTUNITIES TELECOMMUNICATIONS ü Anatel projects that companies from this sector will invest US$ 127 billion over the next 10 years. ü This projection is part of the Telecommunication Update General Plan – a set of short, medium and long range goals. ü This projection includes investment in segments such as cable TV, wide band, fixed and mobile telephony. Source: Anatel 19
PRIVATE PARTICIPATION TELECOMMUNICATIONS Fixed Telephony Year Population (million) Installed Accesses (million) Density (Access / 100 inhabitants) 1996 157. 1 16. 5 10. 5 2008 189. 6 41. 1 27. 7 Year Population (million) Installed Accesses (million) Density (Access / 100 inhabitants) 1996 157. 1 2. 7 1. 7 2008 189. 6 148. 1 78. 1 Mobile Telephony 20
PAC GROWTH ACCELERATION PROGRAM 21
PAC (2007 – 2010) Last update January 2009 US$ Billion 2007 – 2010 Increment up to 2010 2007 - 2010 Logistics 30. 7 19. 8 50. 5 Energy 144. 6 10. 6 155. 3 Social & Urban 89. 9 44. 3 134. 2 265. 2 74. 7 340 Segment TOTAL Source : Federal Government 22
PAC (2007 – 2010) RAILWAYS – HIGH SPEED TRAIN ü Preliminary project contemplates a connection between Rio São Paulo – Campinas (503 Km) ü Key dates: ü Public hearings until September 15 th, 2009 ü Bid announcement: October 2009 ü Bid results: July 2010 ü Projected investment: ü Up to US$ 17 billion (20% public + 80% private) Source: Halcrow Consultants 23
PAC (2007 – 2010) RAILWAYS – HIGH SPEED TRAIN Route: 403 km + 100 km between São Paulo – Campinas Maximum speed: 360 km/h Average speed: 285 km/h Trip time: 1 hour and 25 minutes Price of the ticket: US$ 63 Capacity: 855 passengers Investments: US$ 17 billion Frequency of trains: one departure every 15 minutes Source: Halcrow Consultants 24
FINANCING: BNDES Outlays by Activity (2001 – 2009) US$ Billion 2001 2002 2003 2004 2005 1. 5 2. 4 3. 6 2. 2 1. 8 2. 6 2. 9 1. 6 5 7. 4 6. 9 9. 7 10. 3 9. 5 15. 8 5 Basic Industry 1. 8 1. 7 1 1. 4 2. 5 3. 3 3. 5 3 3. 1 Commerce and Services 1. 5 1. 8 1. 9 1. 8 2. 4 2. 9 4. 6 6. 1 3. 5 Infrastructure 3. 4 6. 5 4. 8 7. 3 8 8. 7 26. 6 19. 9 8. 7 13. 2 19. 8 17. 5 21 24. 8 27 46. 8 47. 7 21. 9 Activity Agribusiness Industry Total 2007 2008 YTD 2009 2006 Jan – Jun. % Share of basic industry (%) 13. 5 8. 6 5. 7 6. 5 10. 0 12. 1 10. 2 6. 3 14. 1 Share of infrastructure (%) 25. 8 32. 9 27. 5 34. 8 32. 2 32. 3 41. 0 41. 7 39. 5 Source: BNDES Elaboration: ABDIB 25
WORLD CUP 2014 Pág. 26
WORLD CUP 2014 Summary • Technical Cooperation Agreement (ABDIB+CBF+GVMT) • Methodology • Main results • Next steps • Phase II Pág. 27
WORLD CUP 2014 Required actions Demand for stadiums Demand for the cities Political and legal requirements Legacy / Heritage of the cities 28
WORLD CUP 2014 Required Actions in 9 areas City Requirements 1. Infrastructure for airports and ports Allowing transfer of delegations, tourists and supporters in a fast and efficient way 2. Infrastructure for roads Enabling connections among airport / hotel / stadium 3. Sanitation 4. Power 5. Telecommunications 6. Hotel network Able to meet demand 7. Tourist and economic potential in the region 8. Hospital network (public and private) 9. Public Security 29
WORLD CUP 2014 National integration REQUIREMENTS • Infrastructure for airports and ports • Infrastructure for roads • Infrastructure for railways • Power • Telecommunications • Public Security • Infrastructure for Tourism 30
WORLD CUP 2014 Process and methodology Number of indicators used in each area Area* Number of indicators Transport – Airports 3 Transport - Ports 1 (*) Transport – Urban Mobility 6 Hotel Network 6 Hospital Network 5 Basic sanitation 8 Security 10 Power 7 Telecommunications 3 Total 49 (*) For passenger terminals only Pág. 31
WORLD CUP 2014 URBAN MOBILITY Selected and used indicators Indicator Unit No. of passengers carried by day – railway system Pass/day, vehicle Avg. occupied area in each transport unit Pass/m 3 No. of passengers carried by day – bus Ideal Level Minimum Level 1, 500 2, 000 4 6 Pass/day, vehicle 400 500 Saturation level of passenger terminals in inter-municipal bus stations % 80 90 Avg. speed at rush hours Km/h 30 22 No. of inhabitants by taxi Inhabit. /taxi 300 430 Pág. 32
WORLD CUP 2014 GAP ANALYSIS Urban Mobility A Ports A Hotel network A Power A Telecomm. A Hospital network A Sanitation Security A A B B B B B Key Indicators - Ideal level - 2014 A 18 Candidate cities Key Indicators- Minimum level - 2014 Airports Explanation A Actual status B Estimated status in 2014 with existing projects Gap still open to be closed with recommended additional projects Minimum Level level of requirements to be a host city for 2014 World Cup Ideal level to enable a city to host any game in 2014 World Cup, independently of the phase 33
WORLD CUP 2014 • Main results: • First report to Government in February 2009 • Selection by FIFA of the 12 host cities in May 2009 • Set up for Project Phase II, focusing the selected 12 host cities. 34
WORLD CUP 2014 FIFA 12 Host cities 1. Belo Horizonte 2. Brasília 3. Cuiabá 4. Curitiba 5. Fortaleza 6. Manaus 7. Natal 8. Olinda (Recife) 9. Porto Alegre 10. Rio de janeiro 11. Salvador 12. São Paulo 35
WORLD CUP 2014 Next Steps • ABDIB is making available specific reports on the study to all 18 candidate cities • ABDIB disseminates all key results for each city together with each local Authority • ABDIB setting up a new specific structure for Phase II of the World Cup 2014 project Pág. 36
WORLD CUP 2014 PHASE II “Even more important than the strategic plan is to materialize the necessary investment” • Focus on : • detailing all identified projects financially • developing the executive projects (engineering, financing, environmental licensing) • modeling partnerships between public and private investors • managing implementation and timeframes • actions required to eliminate possible risks and obstacles to investment Pág. 37
WORLD CUP 2014 Legacy • Promotion of a huge investment in infrastructure and public services, required for the country’s development and growth, will be accelerated because of the World Cup. • Considerable improvement in public urban transport, sanitation and tourism, in both large cities and tourist locations. • Improvement of infrastructure services in airports, energy and transport at large. Pág. 38
WORLD CUP 2014 Legacy • Reduction of diseases tied to lack of sanitation because of heavy investment in critical areas. • Installation of a set of multi-use arenas in almost all key regions helping to put Brazil into the international route for entertainment. • Brazil in the international tourism destinations thanks to a new visibility about its locations, nature, history, culture, society. • Promotion of a better sustainable environment by expanding sanitation and urban transportation. Pág. 39
FINAL MESSAGES 40
FINAL MESSAGES ü Investors in Private Equity Funds are expected to inject more resources into the emerging markets for the next 5 years. ü Brazil is considered no. 2 among the preferred ones Preference Global Ranking for Investors 2008 2009 China 1 st Brazil 4 th 2 nd India 2 nd 3 rd Europe (center and east ) 3 rd 4 th Latin America (without Brazil) 7 th 5 th Africa (without South Africa) 5 th 6 th South Africa 9 th 7 th Middle East 8 th Russia 6 th 9 th Source: EMPEA and FGV - Cepe Capital of Brazilian Funds, in US$ Billion 41
FINAL MESSAGES ü Brazil offers a promising business environment to investors in Infrastructure : ü Country owns the most organized and developed financial system among the BRICs; ü Interest rate is decreasing (favorable environment to private investment); ü Favorable macroeconomic aspects: § Economic stability § External Accounts going relatively well; § Brazil was given the “investment grade” (S&P); § Legal frame in place, as laws for PPPs and Funds 42
FINAL MESSAGES ü Investors in World Cup 2014 are twice welcome: ü They can cooperate to a very important event from both social and economic point of view ü Legacy will equally benefit society and those who accomplished projects or helped in their accomplishment 43
ASSOCIAÇÃO BRASILEIRA DA INFRAESTRUTURA E INDÚSTRIAS DE BASE www. abdib. org. br abdib@abdib. org. br
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