Incentive to investment
Concession of highways and railways and reduction in electricity tariffs
Measures promote lower costs and increased competitiveness
INVESTMENT IN LOGISTICS PROGRAM
Introduced on August 15, the Investment in Logistics Program aims to improve the transportation infrastructure in the country and promote the integration between highways and railways, thus reducing costs and increasing the country’s efficiency and competitiveness. Public and private investments are expected to total R$133 billion, with R$ 79.5 billion in the first five years and the rest in up to 25 years. The goal is to provide the country with a logistic infrastructure compatible with its continental size.
Planning and monitoring of projects and actions will fall under the responsibility of the Planning and Logistics Company (Empresa de Planejamento e Logística - EPL).
Planning and Logistics Company
Established in August, the Planning and Logistics Company (Empresa de Planejamento e Logística - EPL) replaces the High Speed Rail Transportation Company (Empresa de Transporte Ferroviário de Alta Velocidade - Etav). The goal of the company is to structure and qualify, through studies and research, the integrated logistics planning process in the country, connecting the transport modals - road, rail, ports, airports and waterways. The company will participate as a partner in the concession of High Speed Trains, so as to absorb and disseminate new technologies.
Highways: R$ 42 billion will be invested in the duplication and construction of 7,500 kilometers of highways, covering nine stretches of federal highways in eight units of the federation, with 56% of investments in the first five years and the rest in up to 20 years. The main features of the new model are:
- Selection of three concessionaires based on the lowest toll rate, which may be charged only when 10% of the works have been completed. There will be no toll collection stations in urban areas.
- Favorable financing conditions, compatible with the size of investments: interest rates will be the TJLP (Long Term Interest Rate) plus 1.5% per annum, with a grace period of up to 3 years, an amortization period of up to 20 years, and a leverage ratio ranging from 65% to 80%.
Railways: R$ 91 billion will be invested in the construction of 10,000 km of railway lines, covering 12 sections in 17 states, with 62% of investments in the first five years and the rest in up to 25 years.
The new model aims at breaking the monopoly on the use of railways and creating mechanisms to encourage tariff reduction. It will be operated through a Public Private Partnership (PPP).
- The Federal Government will be responsible for commissioning the construction project, as well as for maintaining and operating the railway.
- The railway transportation capacity will be fully acquired by Valec - Engenharia Construções e Ferrovias S.A, a public company linked to the Ministry of Transports, which will be responsible for the public offering of this capability to users willing to carry their own cargo, independent railway operators and concessionaires of railway transportation.
- The right of passage of trains at all meshes will be ensured, as a way to reduce the tariff cost.
- Financing conditions are favorable and compatible with the size of investments: interest rates will be the TJLP (Long Term Interest Rate) plus up to 1.0% per annum, with a grace period of 5 years, an amortization period of up 25 years, and a leverage ratio ranging from 65% to 80%.
CHEAPER ELECTRICITY FOR ALL CONSUMERS
Starting in February 2013, all consumers will pay on average 20.2% less for electricity. Residential consumers will enjoy a 16.2% reduction and, for trade and industry, the reduction will vary according to the voltage level, and may reach as much as 28.0%.
This reduction will be achieved through the combination of early renewal of electricity concessions and the reduction of industry charges levied on the electricity bill
Extension of concessions
Between 2015 and 2017, several concessions for the provision of electricity generation, transmission and distribution services in the country will expire. Instead of getting back all the assets of concessionaire and organizing new bids, the Government will extend these concessions for 30 years, but establishing new tariff-setting procedures based on the low-tariff principle.
The extension of concessions will allow the continuity of service provision, in addition to accelerating the effects of low tariffs, thus reducing the risks that could result from the change of management in the operation of a representative capacity of the generating park and of a transmission system of continental dimensions.
73 contracts will be covered:
Generation: 20 concession contracts with maturity between 2015 and 2017, totaling 22,000 megawatts, equivalent to 18% of the generating park.
Transmission: 9 contracts with maturity in 2015, totaling 85,000 km, with 68,700 km in the Basic Network, equivalent to 67% of the National Integrated System.
Distribution: 44 contracts with maturity between 2015 and 2016, representing 24 million consumer units, equivalent to 35% of the market.
To implement the extension, the concessionaire must accept the remuneration and service provision quality standards set by the Brazilian Electricity Agency (Agência Nacional de Energia Elétrica - ANEEL). The concessions that are not renewed - for choice of concessionaires themselves - will be auctioned again at maturity.
Reduction of sectoral charges
Starting in February 2013, the charges established to ensure the expansion, modernization and efficiency of the sector, as well as universal access to electricity will be eliminated from the electricity bill.
Costs related to the Fuel Consumption Account (Conta de Consumo de Combustíveis - CCC) and to the General Reversion Reserve (Reserva Geral de Reversão - RGR) for distributors, new transmission projects and concessions extended or auctioned will no longer be charged.
To maintain social programs such as Light for All and Social Tariff aimed at the low-income population and the subsidy to electricity generation in isolated areas in the interior of the country, the Federal Government will make an annual contribution to the Energy Development Account (Conta de Desenvolvimento Energético - CDE). An investment of more than R$ 3 billion is planned for 2013, thus reducing the need for payment of CDE quotas by consumers.