PUBLIC-PRIVATE PARTNERSHIP PROGRAM OF THE STATE OF BAHIA Albérico Mascarenhas Secretary of Finance of State of Bahia Federation of Industry of State of São Paulo – FIESP May/19, 2005 Characteristics of Bahia’s PPP Law PPP-Bahia Essential 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. Fiscal Accountability Limits 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. PPP-Bahia Concepts, 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; Essential Clauses to PPP’s Agreements Essential 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. PPP/Bahia - Guarantees Creditor’s Protection Pledged and insurance; personal guarantee or 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 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 Obligor 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 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 Agencies Executive Secretary for the Management Council, associated with the Finance Secretariat. Regulatory Agency Roles (AGERBA). PPP-Bahia Priority 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 PPP-Bahia Major Projects to be Performed Ocean Outfall Roadways and Railways Prisons Ocean Outfall Implementation of New Outfall and Supplementary Works A second Ocean Outfall Customer’s assistance - Salvador - Lauro de Freitas - Existing Basin Densifications TITLE BASIN LIMITS SYSTEMS’ LIMITS LIMITS BETWEEN OUTPOURINGS MUNICIPAL DISTRICT LIMITS RISING STATION PREVIOUS CONDITIONING STATION INTERCEPTOR PRESSURE PIPES Implemented basins that contribute to the Rio Vermelho Outfall Implemented 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 Implementation of New Outfall and Supplementary Works • Work Characteristics Land outfall: • 1,509 m of extension and • 1600 mm of diameter 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 TITLE BASIN 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 Outfall Implemented 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 (CONTINUED) Enterprise’s Benefits 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. Other Depletion Systems OPPORTUNITY PERSPECTIVES WITHIN PUBLIC-PRIVATE PARTNERSHIPS (PPP) SANITATION DEPLETION LOCATION URBAN POPULATION 2004 CURRENT ASSISTANCE (% ) WATER SEWER PERSPECTIVE FOR ASSISTANCE TARGET OF 80% IN DEPLETION ASSISTED INVETIMENTO POPULATION (R$x 1.000) (*) Camaçari 137.200 99 20 109.800 22.200,00 Eunápolis 93.500 95 5 74.800 19.000,00 Feira de Santana 457.600 95 35 366.000 55.600,00 Ilhéus 168.800 97 43 135.000 17.000,00 Teixeira de Freitas 118.800 90 6 95.000 23.700,00 Vitória da Conquista 240.900 98 45 193.000 22.800,00 TOTAL 1.216.800 973.600 160.300,00 Roadways and Railways BA-093 Duplication - 23.3 km and Repair Services of de 81.7 km Location: Road Junction with BR 324 (RMS) Entre Rios Feira de Santana BR 101 road junction (Entre Rios). Extension: Alagoinhas Araçás Works: Catu Pojuca Candeias 105 km –Duplication: Road Junction of the BR 324 -Dias D'Ávila – 23.3 km; Camaçari Simões Filho –Repair Services: from Dias D'Ávila - BR 101 Road Junction BR 101 – 81.7 km. SALVADOR Investment: R$ 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 Place Requirements in the Imprisonment 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 Penitentiary System 1 prison unit in the capital Imprisonment places Construction costs Unit annual operation 1.000 R$ 25,2 milhões R$ 11,5 milhões 6 inland units (1) Imprisonment places Construction costs Unit annual operation 3.500 R$ 101,0 milhões R$ 43,2 milhões Municipalities:Itaberaba, Vitória da Conquista, Seabra, Irecê, Santo Antônio de Jesus and Eunápolis. (1) Institutional Environment Favorable For Investment Favorable Institutional Environment for Investment PPP/Bahia – Economic Growth GDP BRAZIL X GDP BAHIA YEAR 1999 2000 2001 2002 2003 2004 AVERAGE Brazil 0,8 4,4 1,3 1,9 0,5 4,9 2,3 Bahia 2,2 3,9 1,0 1,2 3,0 9,9 3,5 PPP/Bahia – Fiscal Indicators Fiscal Responsibility Law Personnel and Duties Limits Maximum Prudential 2004/ Accomplished Personnel 60% RCL 57% RCL 48,3% RCL Public Debt Evolution Legal Limit 2002 2003 2004 Dívida/RCL 2,00 times 1,82 times 1,63 times 1,42 times * RCL = Net Revenue Primary Surplus 981.233 1.000.000 719.094 800.000 642.037 600.000 400.000 170.920 200.000 0 2001 2002 2003 2004 Evolution of Public Debt 18 ,5 18 ,9 18 ,8 17,1 16 ,7 16 ,2 16 ,0 15,6 A verage Term 6 ,1 6 ,0 6 ,3 6 ,0 1997 1998 1999 2000 5,9 5,7 5,6 5,7 2001 2002 2003 2004 A verage Interest Rate www.sefaz.ba.gov.br BANNER Albércio Mascarenhas Secretary of Finance of State of Bahia e-mail: [email protected] Internet: www.bahia.ba.gov.br Internet: www.sefaz.ba.gov.br Banner of PPP Bahia