Infrastructure Investment OpportunitiesTokyo, 1.3.2011

Brazil

Guilherme Walder Mora RamalhoInfrastructure AdvisorExecutive Office of the President of Brazil

In 2007 – PAC 1! To accelerate the pace of economic growth! To increase employment and income rates! To decrease social and regional inequalities! To overcome infrastructure bottlenecks

In 2009, a new goal! To reduce the impact of the international economic crisis –

countercyclical policy

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

PAC – Growth Acceleration Program

Infrastructure projects in three areas

GROWTH ACCELERATION PROGRAM – PAC 1, 2007-2010

Area 2007-2010 After 2010 TOTAL

LOGISTICS 54.5 28.9 83.3 POWER G&T 171.7 429.4 601.1

SOCIAL AND URBAN 146.8 18.0 164.9

TOTAL 373.0 476.3 849.3

US$ billion

GROWTH ACCELERATION PROGRAM – PAC 2, 2011-2014

Area 2011-2014 After 2014 TOTAL

LOGISTICS 59.4 2.6 61.9 POWER G&T 262.3 356.2 618.5

SOCIAL AND URBAN 221.0 - 221.0

TOTAL 542.6 358.8 901.4

Preliminary investment forecastUS$ billion

POWER GENERATION AND TRANSMISSION

HIGHWAYS

RAILROADS

AIRPORTS

PORTS

URBAN MOBILITY

HOUSING AND SANITATION

INVESTMENT OPPORTUNITIES:

ELECTRIC POWERGENERATION AND TRANSMISSION

ELECTRIC POWER SYSTEM – GENERAL FEATURES

• Number of Customers – 64.6 million• Energy Production – 463.2 TWh / year –

60% of South America• Peak – 67,632 MW

Installed Capacity – 105,066 MW

• Transmission Lines – 96,207 km ! 230kV

Source: Ministry of Mines and Energy

Priority to competitive, renewable sources with low carbon emission

• Annual tenders to contract energy in the regulated contracts environment• Hydroelectric power plants – energy to be delivered at the fifth

year after the tender• Thermal power plants and others – energy to be delivered at the

third year after the tender

• Tenders planned2011-14 54 HPP – 47,870 MW – US$ 57.9 billion

ELECTRIC POWER GENERATION

ALTERNATIVE ENERGY SOURCES

! From 2011 to 2014!71 Wind Power Plants – 1.803 MW !3 Biomass TPP – 224 MW

TOTAL PROJECTED INVESTMENT- US$ 5.5 billion

TRANSMISSION LINES

! Large Interconnections – 22.765 km! Regional Lines – 13.921 km

TOTAL PROJECTED INVESTMENT- US$ 14 billion

PAC 2

Osório 2

Aratua 1

Sangradouro 2Sangradouro 3

Fazenda Rosário 3

Fazenda Rosário Coxilha Negra VII

Coxilha Negra VICoxilha Negra V

Areia BrancaCoqueiros

QuixabaGarças

Lagoa SecaCajucoco

Vento do OesteDunas do Paracuru

Taíba ÁguiaTaíba Andorinha

Icarai

Santa Clara II, III, IV, V e VI

EmbuacaColonia

Icarai I e II

Faisa I, II, III, IV e V

Buriti

Nossa Senhora da Conceição

Novo Horizonte

Pajeu do vento

Barra dos Coqueiros

Macaubas

GuirapaIgaporaSerra do salto

IlheusPindai

Porto SeguroRio Verde

Rei dos Ventos 1, 3

Eurus VICabeco Preto

Mangue Seco 1, 2 , 3 e 5

Licinio de Almeida

Planaltina

Santa Clara I

SeabraPedra do Reino

AlvoradaCandiba

Guanambi

Mar e Terra

Morro dos ventos I, III, IV, VI, IX

Araras

Miassaba 3

Alternative Energy Sources Wind Power

UTE Boa Vista

UTE Baia Formosa

UTE Santa Isabel BC

UTE Rafard BC

UTE Pioneiros II BC

UTE Santa Cruz AB F.I e II

UTE Interlagos

UTE Flórida Paulista BC

UTE São João da Boa Vista

UTE BonfimUTE Iacanga

UTE Quirinópolis (1ª etapa)

UTE Rio Brilhante F. I e II

UTE São João Biogás

UTE São José BC

UTE Quatá BC

UTE Colorado BC

UTE Ferrari

UTE Ester

UTE Destilaria Andrade

UTE Noble

UTE Clealco- Queiroz

UTE Bevap

UTE Biopav II

UTE Vale do TijucoUTE Vale do São Simão

UTE Chapadão Agroenergia

UTE Cocal II

UTE Ben Bioenergia

UTE São Fernando

UTE Angélica

‘

UTE Codora

‘UTE Ipaussu Bioenergia

UTE Unid. Bio. Costa Rica

UTE Santa Luzia I

UTE Unid. Bio. Alto Taquari

UTE São Luiz

UTE Barra Bioenergia

UTE Jataí

UTE Caçu I

UTE CBBUTE Costa Pinto BC

PAC 2PAC 1PAC 1 com conclusão

original após 2010

UTE Lagoa da Prata F. I e II

UTE Paraúna

UTE Porto das Águas

UTE Cachoeira Dourada

UTE Unid. Bio. Água Emendada

UTE Conquista do Pontal

UTE Quirinópolis (BC)

UTE Decasa

UTE Noroeste Paulista

UTE Unid. Bio. Morro Vermelho

Alternative Energy Sources Biomass

OIL AND GASExploration, Production and Natural Gas Transport Infrastructure

Increase oil and gas productionSeismic assessment, drilling, plataform production

! To explore the reserves and enlarge national production,including the new Pre-Salt discoveries

! Value chain: naval industry, mecanic engineering, steel, chemical, precision engineering among other

PRODUCTION AND EXPLORATION

US$ 418,5 billion 2011-2014 – US$ 110.4 billionafter 2014 – US$ 308 billion

Reserves around 10.6 a 16 billion barrels of oil equivalent (boe) Total Pre-salt área: 149 mil km²

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SÃO PAULO

RIO DE JANEIRO

Parati

Tupi, Iracema

Iara

GuaráCaramba

Bem-Te-Vi

Carioca,Abaré e Iguaçu

Azulão

Corcovado

Jubarte – Parque das BaleiasSep/2008 – first pre-salt production

C-M-101

Júpiter

PRODUCTION AND EXPLORATION – Pre-Salt

Petroquímica Suape – PTA

Refinaria Abreu e Lima

Complexo Petroquímico do Rio

Refinaria Premium I Refinaria Clara Camarão

Fábrica de Fertilizantes Nitrogenados III

Complexo Químico UFN-4

Fabrica de Amônia

PAC 2PAC 1PAC 1 com conclusão original após 2010

Refinaria Premium II

FAFEN-SE Sulfato de amônio

REFINEMENT, PETROCHEMESTRY and FERTILIZER

Petroquímica Suape – PET POY

US$ 76.6 billion 2011-2014 – US$ 41,8 billionPós 2014 – US$ 34,71 billion

HIGHWAYS

Total - US$ 29 billion

Type of investment KmConstruction 8.000Maintenance 55.000Projects 12.600

PAC 2 – 2011 – 2014 - HIGHWAYS

Preliminary investment forecast

Length: 2,212.4 km• BR-040/Distrito Federal-Goiás-Minas Gerais – 937 km• BR-116/Minas Gerais – 817 km • BR-101/Espírito Santo – 458.4 km

Total Investment: US$5.5 billion

Central-South Region –54% of Brazil’s GDP

FEDERAL HIGHWAY CONCESSION PROGRAM

Governador Valadares

Belo Horizonte

GO

DF

MG

BR-040

BR-116

Vitória

ES

BR-101

Concession bidding1nd Half, 2011

Internal Rate of Return: 8.0% per year • Reference value used on the 3rd Phase of the Federal Highway Concession

Program

Term of Concession: 25 years

Annual tariff adjustment according to inflation variation

Investments described in the Highway Usage Program• Constructions required (recovery, duplication, lighting, and others)• Constructions conditioned to the volume of traffic (to expand capacity)• Performance Parameters: paving, safety, signage, lighting, user assistance,

and others.

Focus on service qualityConcessionaire performs the necessary investments in the most efficient way to meet the Performance Parameters

*Allows the participation of Brazilian or foreign companies, financial institutions, pensions funds and private equity funds, separately or in consortiums

CONCESSION MODEL

BR-040/DISTRITO FEDERAL-GOIÁS-MINAS GERAIS

Connects the federal capital, Brasília, to two important cities: Belo Horizonte and Rio de Janeiro

Belo Horizonte

GO

DF

MG

BR-040

*Prices on January, 2007

Length: 937 kmToll Plazas: 12Basic Tariff

• US$ per 100 Km: 2.1• Toll*: US$ 1.4

Total Investment: US$1.8 billionConcession bidding

1nd Half, 2011

Length: 817 kmToll Plazas: 8Basic Tariff

• US$ per 100 Km: 3.1• Toll*: US$ 3.5

Total Investment: US$2.3 billion

BR-116/MINAS GERAISImportant South-Southeast connection with

the Northeast

*Prices on January, 2007

Governador ValadaresMG

BR-116

Concession bidding1nd Half, 2011

BR-101/ESPÍRITO SANTOConnecting corridor linking RJ, SP and BA states, tourism

hubs with high traffic volume. Crucial to cargo transportation

VitóriaES

BR-101

Length: 458.4 kmToll Plazas: 7Basic Tariff

• US$ per 100 Km: 3.7Total Investment: US$1.4 billion

Concession bidding1nd Half, 2011

RAILROADS

Total - US$ 26 billion

Type of investment KmConstruction 4.700Studies 2.985High Speed Train 1.991

PAC 2 – 2011–2014 – RAILROADS

Preliminary investment forecast

RAILROAD CONCESSION PROGRAM

Participation in bidding processes• North-South Railroad• East-West Integration Railroad• High-Speed Rail

Separation of Infrastructure and Operations:• VALEC is a public company which is the concessionaire for the

North-South, East-West Integration and Midwest Integration Railroads

• Infrastructure management would continue to be under VALEC’s responsibility, and totally separated from the operation

• The operation concessionaire (logistics operator) would acquire the right-of-way to use a preset number of tracks

• Goal is to optimize the usage of the railroad and reduce costs due to the efficiency gains

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

Anápolis/ GO

Port of Itaqui/MA

Port of Vila do Conde /PA

Port of Itaguaí/RJ

Port of Santos/SP

Palmas/TO

Estrela D’Oeste/SP

Ilhéus/BA

São Francisco Waterway

Figueirópolis/TO

NORTH-SOUTH RAILROAD – SOUTH SECTION

Peru

• 33% of Brazilian agricultural production• 72% of agricultural land• Large mineral reserves• Outflow of the agro-industrial and

mineral production to four ports

Length: 1,525 km

Estrela D’Oeste (SP)

Uruaçu

Açailândia

Palmas

Anápolis

North Section

South Section

AraguaínaAguiarnópolis

Section to be Concessed

Concessed Section

Alvorada Uruaç

uAnápolis

Aguiarnópolis

Palmas

Açailândia

Santa Fé do Sul

Araguaína

Port of Itaqui / MA

Bidding for the logistic operator1st Half, 2011

EAST-WEST INTEGRATION RAILROAD

• Outflow of the agricultural and mineral production• Waterway integration

Length: 1,527 kmIlhéus (BA)

Figueirópolis (TO)

Port of Itaqui / MA

Port of Vila do Conde / PA

Port of Itaguaí / RJ

Port of Santos / SP

Bidding for the logistic operator1st Half, 2011

HIGH-SPEED RAILS PLANNED

Campinas - São Paulo - Rio de Janeiro – 511 kmMarket Potential

• Metropolitan Region of São Paulo: 19 million inhabitants• Metropolitan Region of Rio de Janeiro: 12 million inhabitants• Metropolitan Region of Campinas: 2.5 million inhabitants

Economic Importance• Rio de Janeiro and São Paulo States concentrate 45 % of Brazil’s GDP• São Paulo is Latin America's biggest financial center, concentrating 70% of the stock market• Rio de Janeiro is the biggest Brazilian tourism hub

Concession bidding1st Half, 2011

Metropolitan Region of Campinas

Metropolitan Region of São Paulo

São José dos Campos Taubaté

Volta Redonda

Resende

Metropolitan Region of Rio de Janeiro

36 million inhabitants

HIGH-SPEED RAIL – HSR Project scope• Estimated investment: US$19.7 billion• Deadline for operation start: 2016

Concessionaire responsible for the design, construction, operation and maintenance, complying with technical performance parameters;Auction to be open to all existing technologiesCompulsory technology transferPublic sector participation: own capital and financingDocumentation available at www.tavbrasil.gov.br• Technical studies on demand, alignment, geology, operation and economic-financial

modeling completed and available

Manaus

FortalezaNatal

Recife

Salvador

Belo Horizonte

Brasília

Cuiabá

São Paulo Rio de JaneiroCuritiba

Porto Alegre

WORLD CUP 2014 – HOST CITIES

RESPONSIBILITY ASSIGNMENT MATRIX

PortsPassenger Terminals Federal Government

AirportsPassenger Terminals and Lanes Federal Government

Stadiums Construction, reform and maintenance States and Municipalities

Urban Mobility States and Municipalities

Hotels Private sector

Issue Responsible

Federal Government

financing

AIRPORTS

GuidelinesTo provide airports a structure suitable for:

• Ensuring quality care and users’ comfort• Meet the projected increased demand

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

Total: 25 airports

AIRPORTS

10011510

44 53 54 58 65 66 61 7183 90 98

13

119 10

9 9 1011

1312

13 13

05

96

04

82

03

71

02

75

01

74

00

68

99

63

98

63

97

55

111

06

102113

0807

4% py

DomesticInternational

AIRPORTSHistorical Demand

1997 : 0.3 passengers carried per capita (163.8 million)2008 : 0.6 passengers carried per capita (189.6 million)6 milions of new passengers in 2009

10% py

59%

Fonte: EMBRATUR

80%

09

128

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

Number of passengers: Million boardings + landings + connections

Airport

Belo HorizonteBrasíliaCuiabáCuritibaFortalezaManausNatalPorto AlegreRecifeRio de JaneiroSalvadorSão PauloTotal

US$ Million, Preliminary

Investment

WORLD CUP HOST CITIES AIRPORTS

240,4

440,2

51,5

42,8

164,4

192,6

334,6

203,4

11,6

404,3

26,5

1153,8

3.266,2 Considering Guarulhos (US$720 million) and Viracopos

(US$ 410 million)

AIRPORTS

PORTS

• Complementary investments to PAC• Focus on passengers terminals• Host cities with projected deficit in number of beds

PORTS - World Cup

PORTS CONSTRUCTION AND MODERNIZATIONUS$ 2.9 billion! Build and modernize docks, piers, terminals, improve aquatic and land access! Debureaucratization of port operations! Passengers Terminals for the World Cup 2014

! Reduced logistics costs! Better operational efficiency! Increased competitiveness! Encourage private investments

48 PROJECTS – 21 PORTS - US$ 2.9 billion

Ventures QuantityDredging 12Port Infrastructure 24Logistics Intelligence Systems 5Passengers Terminals – World Cup 2014 7

URBAN MOBILITY

PAC 2 - Subway, LRT, BRT and bus lanes! 1st Phase – US$ 6.8 billion – launched Feb 16th

!World Cup - projects selected in December 2009!Federal Government Financing!Execution by state and city governments

! 2nd Phase – US$ 10.2 billion!Public transportation systems in major urban centers

InvestmentUnion Budget 3.4

Financing 6.8TOTAL 10.2

US$ billion

URBAN MOBILITY

Modal Qty Project Value FinancingSubway 2 21 20

Bus Terminals 3 38 36 Monitoring 3 66 66

VLT 2 370 312 Bus Corridors 18 1,138 1,067

Monorail 2 2,449 989 BRT 20 2,735 2,098

Total 50 6,817 4,587

US$ Million

URBAN MOBILITY – WORLD CUPSummary per Modal

URBAN MOBILITY FINANCING – WORLD CUP

• Deadline: 4 years of grace period after signing the contract20 years to repay after the grace period (30 years for public rail transport)

• Scope: Light Rail Trains (LRTs), Monorail and Bus Rapid Transit (BRT)

STADIUMS

STADIUM FINANCING

Main financing characteristics:

• Amount: Up to 75% of the project value, limited to R$400 million• Term: 3 years of grace period after signing the contract

12 years to repay after the grace period

STADIUMS SITTUATIONIntervention

(*) Considering the basic design values. Including the constructions around the stadiums at São Paulo and Curitiba.

ReformB. Horizonte

ReformCuritiba

Total

ReconstructionCuiabá

ReformR. Janeiro

São Paulo Reform

Brasília Reform

Manaus Reconstruction

Fortaleza Reform

Natal Construction

Recife

Porto Alegre Reform

Salvador Reconstruction

Privately-owned

Government-Owned

Public-private partnership

Investment (R$ million)

Capacity (thousand)

Cost per seat (R$ thousand)

426.1 70 6.1

184.5 41 4.5

5,704.3 687 8.3

454.2 45 10.1

600.0 83 7.2

555.0 72 7.7

745.3 69 10.8

515.0 44 11.7

623.0 60 10.4

350.0 45 7.8

529.5 46 11.5

130.0 62 2.1

591.7 50 11.8

R$ 3.09 billion

R$ 1.74 billion

R$ 0.87 billion

Construction

HOUSING AND SANITATION

“MINHA CASA, MINHA VIDA” PROGRAM

•1st phase – 2009-2010 – US$30.7 billion • Production of 1 million homes to families with income up to US$2,784 – equivalent to 14% of the housing deficit• Subsidies for low-income families (up to US$1,670 per month)• Long-term government partnership with private investors• Establishment of a Guarantee Fund to reduce risks and costs

•2nd phase – 2011-2014 – US$40.3 billion • Production of 2 million homes

SANITATION

•PAC 2• Water treatment• Sewage and waste treatment• Projects and studies

• To expand sewage collection and treatment system• Improve waste treatment and reduce environmental damage

TOTAL PROJECTED INVESTMENT- US$ 12.6 billion

Infrastructure Investment OpportunitiesTokyo, 1.3.2011

Brazil

Guilherme Walder Mora RamalhoInfrastructure AdvisorExecutive Office of the President of Brazil