BR-050 BRAZILIAN INTERSTATE TO BE AUCTIONED WEDNESDAY, SEPTEMBER 18
The length of the entire concession stretch is 436.6 km. Of this total, the concessionaire is responsible for the construction of additional lanes in the 218.5 kilometers of highway between Cristalina and the Goiás-Minas Gerais state border
Ideas get bigger when you share them...
BRASÍLIA, BRAZIL - September 18, 2013 (www.investorideas.com newswire) The Federal Government will officially grant the operation and maintenance of the BR-050/GO/MG interstate highway to the private sector this Wednesday, September 18. The grant (made under the concession model) marks the first road concessions offered under the Logistics Investment Program (PIL in Portuguese). The stretch of highway to be granted, ranging from Cristalina (GO) to the Minas Gerais-São Paulo state border, will be auctioned on the BM&FBOVESPA Stock Exchange in São Paulo . The winner of the auction (which will have eight competing proposals) will be the company that commits to charging the lowest toll rate. This particular highway concession will generate investments of R$ 3 billion over its thirty-year period.
The toll rate ceiling fixed in the bid announcement was R$ 0.0787 per kilometer of highway. The winning company will be the one that offers the greatest discount from this reference amount. The length of the entire concession stretch is 436.6 km. Of this total, the concessionaire is responsible for the construction of additional lanes in the 218.5 kilometers of highway between Cristalina and the Goiás-Minas Gerais state border. It is estimated that the private sector will spend approximately R$ 650 million on these expansions. The remaining 218.1 km have been almost fully duplicated by the National Department of Transport Infrastructure (DNIT). Only 16 kilometers of the 218 are still left to duplicate, and will be completed soon.
Besides duplicating the portion of road within the state of Goiás, the company that wins the bid must also invest in the recovery, maintenance and preservation of the entire highway in both states, provide a number of services to users and deploy third lanes in duplicated roads whenever the volume of traffic so requires.
In addition to the R$ 650 million to be spent on the construction of additional lanes, the concessionaire will also invest an additional R$ 2.35 billion on the stretch of highway under its responsibility over the 30-year concession period, covering portions in both states (Minas Gerais and Goiás). By the fifth year of the concession contract, the winning company must have conducted structural interventions on the pavement and functional and operational improvements on the other elements of the highway, including main road and shoulder repairs, adjustments to signage, recovery of safety elements, emergency recovery of bridges, bypasses and drainage structures, implementation of User Support Services (SAU in Portuguese), improvements to right-of-way infrastructure, registration of all road elements and conduction of accident analyses.
Additionally, the concessionaire must ensure the conservation and maintenance of the highway until the end of the contract. The conservation investments will include physical maintenance planned to restore and improve the technical and operational characteristics of the highway. Maintenance will include routine and emergency operations aiming to preserve the technical and physical features of the highway.
The Logistics Investment Program
Launched in 2012, the Logistics Investments Program (PIL) is the largest logistics program in the Western Hemisphere . Among other objectives, the PIL endeavors to provide Brazil with a transportation system that is adequate to its size, and leverage the country's economic growth. Based on a model of partnership between the public and private sectors, the initiative allows for private investment in the highway sector through concession agreements.
The program forecasts R$ 51.6 billion in investments for nine stretches of highway, totaling 7,000 km of roads. Specifically for roads, R$ 26.3 billion are to be invested in the first five years of the program, with an additional R$ 25.3 billion to be invested over the subsequent 25 years.
The concessionaires will be selected through public auctions. The winners will be responsible for duplications and improvements to the auctioned stretches, conducting road maintenance and providing support to users. In exchange, they will have exploration rights through the charging of toll rates on the highways granted under concession. The services provided will be regulated and supervised by the National Ground Transportation Agency (ANTT).
Besides BR-050/GO/MG, the following highways will also be granted to the private sector under a concession program: BR-101/BA, BR-163/MT, BR-163/MS, BR-153/TO/GO, BR-060/153/262/DF/GO/MG, /BR-040/DF/GO/MG, BR-116/MG and BR-262/ES/MG. The concession bid notice for BR-101/BA was published on August 29 this year. The bid is scheduled for October 23, with auctions estimated to take place in November and December. The auction of BR-262/ES/MG, which would have been held on Wednesday, September 18, did not have any takers.
Guidelines for the PIL concession agreements
The concessionaires will be selected through public auctions, where the winner will be the bidder offering to charge the lowest toll rates. The concession agreements have a 30-year term and require highway duplications over the first five years. In addition to this added benefit, users will also enjoy a number of services not currently available, such as monitoring by cameras on the entire route, mechanical and medical aid systems, speed control systems and an Operational Control Center . It is also the obligation of the concessionaire to restore and maintain the highway at an adequate level throughout the concession period, ensuring comfort and safety for users.
Noteworthy investments to be conducted by the concessionaires over the first five years of the agreement, within which the lanes are to be doubled, include road restorations and investments in items that will facilitate the provision of services to users. Furthermore, the agreement only allows for applying tolls when 10 percent of the projects are completed. Urban stretches will not be tolled.
The Brazilian Development Bank (BNDES), the Caixa Econômica Federal and the Bank of Brazil have established their financing conditions for investments to be made on the PIL road concessions. Noteworthy is the easing of collateral requirements for concessionaires: loan seekers will no longer be required to submit corporate guarantees, and will receive financing in the Project Finance modality (under which the project itself serves as collateral to the loans).
The composition of the collateral package will vary according to the stage of the project. The general financing conditions will be fully compatible with the highway concession projects conducted under the PIL:
Five-year grace period;
Amortization over 20 years;
Total financing term of 25 years;
Interest rate calculated as the TJLP (long term interest rate)+ up to 2 percent per year;
Financing for 70 percent of the investments.
A bridge loan was also made available, with amounts equivalent to 30 percent of long-term financing and initial disbursements within 90 days after signing of the concession agreement, which will provide resources for the timely realization of investments in concessions.
In summary, the financing model will increase competition in the highway concession auctions, with direct consequences on rate values. It will also allow future concessionaires to start the investments required by their agreements in a timely manner, thus providing citizens with highways of an appropriate capacity and quality.
Throughout the entire PIL, 5,850 km of highway lanes will be duplicated (out of a total of 7,000 kilometers granted under concession). Concessionaires will be responsible for the expansion of more than 5,000 km of road. The remaining lane expansions (680 km) will be the responsibility of the National Department of Transport Infrastructure (DNIT), as those particular stretches are part of the Growth Acceleration Program (whose works have either been initiated or are in final stages of preparation).
Ceiling rates per toll plaza (BR-050/GO/MG)
*Benchmark rate for auction
Minas Gerais municipalities covered
Goiás municipalities covered
Cristalina Cumari Ipameri
Catalão Campo Alegre de Goiás
The Secretariat for Social Communication (SECOM) of the Federative Republic of Brazil is responsible for coordinating the public relations activities for the government of Brazil . The official website of the Brazilian State is: www.brasil.gov.br. The official social media accounts for SECOM International are on Facebook and Twitter at http://www.facebook.com/BrazilGovNews/ and twitter.com/BrazilGovNews.
Published at the Investorideas.com Newswire - Big ideas for Global Investors
Disclaimer/ Disclosure:The Investorideas.com newswire is a third party publisher of news and research as well as creates original content as a news source. Original content created by investorideas is protected by copyright laws other than syndication rights. Investorideas is a news source on Google news and Linkedintoday plus hundreds of syndication partners. Our site does not make recommendations for purchases or sale of stocks or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated by featured companies, news submissions, content marketing and online advertising. Contact each company directly for press release questions. Disclosure is posted on each release if required but otherwise the news was not compensated for and is published for the sole interest of our readers. More disclaimer info: http://www.investorideas.com/About/Disclaimer.asp
BC Residents and Investor Disclaimer : Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: http://www.bcsc.bc.ca/release.aspx?id=6894. Global investors must adhere to regulations of each country.