Albérico MascarenhasSecretary of Finance of State of Bahia

Federation of Industry of State of São Paulo – FIESP May/19, 2005

PUBLIC-PRIVATEPARTNERSHIP PROGRAM OF

THE STATE OF BAHIA

 

Characteristics of Bahia’s PPP Law

Essential ConcernsEssential ConcernsEssential ConcernsEssential Concerns

Creation of a benchmark to attract private

investments, aiming at strengthening the

State infrastructure.

To prevent the use of such benchmark to

defraud the fiscal strictness and imbalance

the State finance.

To explore supplementary services to provide

the project with better financial sustainability

and to reduce the tariff impact.

PPP-Bahia

Fiscal Accountability

Limits for annual expenditureLimits for annual expenditureLimits for annual expenditureLimits for annual expenditure

Expenses must not exceed 5% of the Current Net Income.

In the Federal Law, 1% of the CNI ended by prevailing.

The State is prevented to enter into new agreements if the established limit is exceeded.

Concepts, principles and transparencyConcepts, principles and transparencyConcepts, principles and transparencyConcepts, principles and transparency

Minimum amount: The monetary expression of an amount higher than R$ 20 million prevailed.

Total access to data and reports, including for any reviews.

Inclusion in the Quadrimester Report on Fiscal Management and submitted in Public Hearing;

PPP-Bahia

Essential Clauses to PPP’s Agreements

Essential clausesEssential clausesEssential clausesEssential clauses

Sharing with the public administration of economic profits, resulting from the risk reduction of partnership financing, and of ascertained productive gains when performing the agreement;

Pledged installment withholding, in the last years of the agreement, to ensure the wholeness of the enterprise, which will be released after the agreement termination.

Creditor’s ProtectionCreditor’s ProtectionCreditor’s ProtectionCreditor’s Protection

Pledged and personal guarantee or insurance;

Issuance of performance certificates directly and in favor of the project financing institution;

Financing entity allowed to receive payments trough the obligor fund.

PPP/Bahia - Guarantees

Creditor’s ProtectionCreditor’s ProtectionCreditor’s ProtectionCreditor’s Protection

Obligor Fund.

Association with State Resources, including the Royalties’ and CIDE’s, other than taxes.

The contractor may collect receivables of the contracting party from third parties, other than taxes.

PPP/Bahia - Guarantees

PPP/Bahia - Guarantees

Obligor FundObligor FundObligor FundObligor Fund

Creation of the Obligor Fund for the PPP of the State of Bahia – FAGE Bahia.Guarantee with a contribution up to 30% of the annual obligations paid by treasury resources; Sources:

‣ 20% from the Royalties, while the 30% is not reached and up to 20% after exceeding the ceiling or if equal to it;

‣ 20% from CIDE (idem Royalties); ‣ other budgeting resources and additional credits; ‣ The Fund’s financial applications; ‣ Internal and external credit operations; ‣ donations, allowances, contributions and legacies.

PPP/Bahia - Control and Management

Management Council - Composition Management Council - Composition

Management Council of the PPP Program:I - the Finance Secretary (Chairman);II - the Planning Secretary (Deputy Chairman);III - the Administration Secretary;

IV - the Government Secretary; V - the State Attorney General; VI - up 2 members, at the Governor free discretion.

State Secretary Head Officers, with direct interest on a certain partnership;

PPP/Bahia - Control and Management

Executive Department and Regulatory AgenciesExecutive Department and Regulatory Agencies

Executive Secretary for the Management Council, associated with the Finance Secretariat.

Regulatory Agency Roles (AGERBA).

PPP-Bahia

Priority AreasPriority AreasPriority AreasPriority Areas

Education, health and social welfare;

Public transports (roadways, railways, ports and

airports);

Sanitation;

Safety, defense, justice and imprisonment

system;

Science, research and technology, including

information technology;

Agribusiness (irrigated agriculture and

agricultural-industrialization);

Other public areas of social or economic interest.

 

Major Projects

Major Projects to be PerformedMajor Projects to be Performed

Ocean Outfall

Roadways and Railways

Prisons

PPP-Bahia

 

Ocean Outfall

Implementation of New Outfall and Supplementary Works

A second Ocean

Outfall Customer’s assistance

- Salvador

- Lauro de Freitas

- Existing Basin

Densifications

TITLEBASIN LIMITS

SYSTEMS’ LIMITS

LIMITS BETWEEN OUTPOURINGS

MUNICIPAL DISTRICT LIMITS

RISING STATION

PREVIOUS CONDITIONING STATION

INTERCEPTOR

PRESSURE PIPES

OCEAN OUTFALL

Implemented basins that contribute to the Rio Vermelho OutfallImplemented basins currently contributing (provisional) to the Rio Vermelho Outfall and final contribution to the Jaguaribe Outfall

Basins planned to be implemented in the second phase which will contribute to the Jaguaribe Outfall

• Work Characteristics Land outfall:

• 1,509 m of extension and

• 1600 mm of diameter

(CONTINUED)

Previous Conditioning

Station (ECP) to a flow of

3.m3/s

Ocean Outfall:

• 3,648 m of extension

• 5,9 m3/s capacity.

Investment: R$ 260

million

Implementation of New Outfall and Supplementary Works

TITLEBASIN LIMITS

SYSTEMS’ LIMITSLIMITS BETWEEN OUTPOURINGS

MUNICIPAL DISTRICT LIMITS

RISING STATION

PREVIOUS CONDITIONING STATION

INTERCEPTOR

PRESSURE PIPES

OCEAN OUTFALL

Implemented basins that contribute to the Rio Vermelho OutfallImplemented basins currently contributing (provisional) to the Rio Vermelho Outfall and final contribution to the Jaguaribe Outfall

Basins planned to be implemented in the second phase which will contribute to the Jaguaribe Outfall

It will serve a population of approximately 1,900,000 inhabitants. Implementation of the Jaguaribe system will provide sanitation services to an area of approximately 20,000 hectares.Improvement of the users’ life quality and reduction of expenditure on the public health sector.Possibility to fulfill all basin sanitation depletion with significant densification, in Salvador and its metropolitan region, without damages to tourism - major economic activity and attraction of such cities, as well as preventing the spreading diseases transmitted by water.

Enterprise’s Benefits

Other Depletion Systems

WATER SEWERASSISTED

POPULATION INVETIMENTO (R$x 1.000) (*)

Camaçari 137.200 99 20 109.800 22.200,00

Eunápolis 93.500 95 5 74.800 19.000,00

Feira de Santana 457.600 95 35 366.000 55.600,00

Ilhéus 168.800 97 43 135.000 17.000,00

Teixeira de Freitas 118.800 90 6 95.000 23.700,00

Vitória da Conquista 240.900 98 45 193.000 22.800,00

TOTAL 1.216.800 973.600 160.300,00

OPPORTUNITY PERSPECTIVES WITHIN PUBLIC-PRIVATE PARTNERSHIPS (PPP)SANITATION DEPLETION

PERSPECTIVE FOR ASSISTANCE TARGET OF 80% IN DEPLETION

URBAN POPULATION

2004

CURRENT ASSISTANCE (%)

LOCATION

 

Roadways and Railways

BA-093 Duplication- 23.3 km and Repair Services of de 81.7 km

SALVADOR

Feira deSantana

Entre Rios

Alagoinhas

Simões Filho

Camaçari

Araçás

Catu

PojucaBR-116BR-324

BA-093

Candeias

BR-101

Location:

Road Junction with BR 324 (RMS)

BR 101 road junction (Entre Rios).

Extension:

105 km

Works:

–Duplication: Road Junction of the BR 324 -Dias D'Ávila – 23.3 km;

–Repair Services: from Dias D'Ávila - BR 101 Road Junction BR 101 – 81.7 km.

Investment:

R$ 144 million.

HIGHWAY AISLE IBOTIRAMA - ITABUNA

Location:

Ibotirama – Bom Jesus da Lapa – Brumado – Vitória de Conquista – Itabuna

Extension:

738 km.

Works:

Recovery and Suitability

Estimate Investment: R$ 317 million

 

Prisons

Penitentiary System

A) Imprisonment System Place Shortage 1,367

B) Prisoners in District Prisons 4,500

C) Place Shortage (A +B) 5,867

D) Intended places included in ongoing work 2,026

E) New work requirements (C – E) 3,841

Place Requirements in the Imprisonment SystemPlace Requirements in the Imprisonment System Place Requirements in the Imprisonment SystemPlace Requirements in the Imprisonment System

(1) Municipalities:Itaberaba, Vitória da Conquista, Seabra, Irecê, Santo Antônio de Jesus and Eunápolis.

Penitentiary System

Imprisonment places 1.000Construction costs R$ 25,2 milhõesUnit annual operation R$ 11,5 milhões

Imprisonment places 3.500Construction costs R$ 101,0 milhõesUnit annual operation R$ 43,2 milhões

1 prison unit in the capital1 prison unit in the capital1 prison unit in the capital1 prison unit in the capital

6 inland units (1)6 inland units (1)6 inland units (1)6 inland units (1)

 

Institutional Environment Favorable For Investment

 

Favorable Institutional Environment for Investment

  PPP/Bahia – Economic Growth

GDP BRAZIL X GDP BAHIA

YEAR Brazil Bahia

1999 0,8 2,2

2000 4,4 3,9

2001 1,3 1,0

2002 1,9 1,2

2003 0,5 3,0

2004 4,9 9,9

AVERAGE 2,3 3,5

 

Public Debt

PPP/Bahia – Fiscal Indicators

Fiscal Responsibility Law

EvolutionLegal Limit

2002 2003 2004

Dívida/RCL2,00

times1,82

times1,63

times1,42

times

Personnel and Duties

Limits Maximum Prudential2004/

Accomplished

Personnel 60% RCL 57% RCL 48,3% RCL

* RCL = Net Revenue

Primary Surplus

170.920

642.037

719.094

981.233

0

200.000

400.000

600.000

800.000

1.000.000

2001 2002 2003 2004

1997 1998 1999 2000 2001 2002 2003 2004

6,1 6,0 6,3 6,0 5,9 5,7 5,6 5,7

18,5 18,918,8

17,1 16,7 16,2 16,0 15,6

Average Term

Average Interest Rate

Evolution of Public Debt

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Albércio MascarenhasSecretary of Finance of State of Bahia

e-mail: alberico@sefaz.ba.gov.br

Internet: www.sefaz.ba.gov.br

Internet: www.bahia.ba.gov.br