Presentation on theme: "José Andrade Costa Executive Secretary for Public-Private Parternship Program PUBLIC-PRIVATE PARTNERSHIP PROGRAM OF THE STATE OF BAHIA FINANCE DEPARTMENT."— Presentation transcript:
José Andrade Costa Executive Secretary for Public-Private Parternship Program PUBLIC-PRIVATE PARTNERSHIP PROGRAM OF THE STATE OF BAHIA FINANCE DEPARTMENT Executive Department of PPPs Program Bahia Trade Association – ACB April 28, 2005
STATES REVENUES ENTAILED (2004) PERSONNEL 60,0% HEALTH AND EDUCATION (EXCEPT PERSONNEL) 13,6% PUBLIC DEBT (EXTRA AND INTERN-LIMITS) 17,7% OTHERS STATE SECTOR (EXCEPT PERSONNEL) 0,7% PASEP, C&T AND POVERTY FUND 2,8% TOTAL 94,8% Public-Private Partnerships Bahias Project
Non-Shared Revenues Shared Revenues Evolution of Shared and Non-Shared Federal Revenues (1988 – 2004)
Real Variation (IPCA) of Federal Collection of Taxes - 2004 / 2003 R$ Billions 2004 2003 2004 / 2003 SHARED TAXES 137,9132,6 4,00% INCOME TAX 106,4 102,6 3,65% IDUSTRIALIZADE TAX 23,6 21,7 8,73% CIDE (FUEL TAX) 7,9 8,3 (3,92)% NON SHARED TAXES 172,9148,8 16,21% SOCIAL SECURITY 79,2 65,7 20,60% FINANCIAL MOVEMENT 27,6 25,4 7,45% NET PROFIT 20,3 18,5 9,66% SOCIAL PROGRAM 20.1 19,1 4,89% ( PRICES OF DECEMBER/04 – IPCA)
Favorable Institutional Environment for Investment
PPP/Bahia – Economic Growth GDP BRAZIL X GDP BAHIA
Public Debt PPP/Bahia – Fiscal Indicators Fiscal Responsibility Law Personnel and Duties * RCL = Net Revenue
Lately existing legislative overview GENERAL AGREEMENT LAW (LAW 8.666/93) GENERAL CONCESSION LAW (LAW 8.987/95) Works, services and procurement to Public Authority Payment as performed (monthly measured) There is not private financing Budgeting resources Services: contractual terms no more than 5 years Services and public works to the Public in general Compensation due to service provision Tariff system Supplementary tariff absent The laws did not prevent PPP shaping And neither did they stimulate it Placing PPPs Subject
Concepts and Characteristics Placing PPPs Subject Long-term agreement for service provision, entered into by the public sector and the private entity; Private entity commits itself to provide a certain quantifiable utility: road kilometers, imprisoning positions, hospitals beds,. Compensation according to performance indicators. Financing: Private entitys attribution Payment: After the enterprise performance and according to its use and results, by means of tariff charges, which can be fully or partially supplemented by the State. Typical modeling: The private entity designs, builds, manages and maintains it.
Traditional modeling and PPPs Investment estimated costs Non-planned costs Delay Estimated Costs Non-planned Costs Construction Phase Operating Phase 5 10 15 years No payment until the construction is completed Payment based on performance (targets) Construction Phase Operating Phase Traditional Public Agreement Public-Private Partnership (PPP) Agreement FINANCING ACQUISITIONFINANCING ACQUISITION Placing PPPs Subject
How does the Legislative Bill define PPP agreement? It is a concession agreement (Law No. 8.987/95), either as sponsored or administrated. Sponsored concession is the public service or work concession when it involves in addition to tariffs charged to users, a monetary consideration for services provided by the public partner to the private partner. Administrated concession is the service provision agreement in which the Public Administration is the direct or indirect user, even when involving completing the work or goods supply and placement. The common concession addressed in the Law No. 8.98795 is not a public-private partnership when no monetary consideration for services provided by the public partner to the private partner is involved. Definition
PPPs Context Context It was first used in England, in 1992. Maastricht Treaty in 1991 and European Union Fiscal Accountability Law - Brazil. Fiscal constraint macro-economic environment. Relative depletion of the investing capacity The State is unable to fulfill the demands. The construction of new concepts and practices for Public Authority performance is required.
PPPs operating areas Context Prisons and courts Hospitals Military facilities IT Systems Public lighting Schools Sports facilities Roads and bridges Light railways systems Wastage management Low-income houses Universities Government buildings
PPP, internationally PPP projects already implemented: All United Kingdom countries Spain France Portugal Germany Greece Holland Italy Australia Sweden Norway Japan South Africa Hungary Mexico Poland Chile On going or in study PPPs: Brazil Canada Singapore Malaysia Romania Context
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. PPP-Bahia
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.
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; PPP-Bahia
Essential Clauses to PPPs 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.
Creditors 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
Creditors Protection Obligor Fund. Association with State Resources, including the Royalties and CIDEs, 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 Funds 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 to be Performed Ocean Outfall Roadways and Railways Prisons Child Custody Institution PPP-Bahia
Implementation of New Outfall and Supplementary Works A second Ocean Outfall Customers 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 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
Work Characteristics Land outfall: 1,509 m of extension and 1600 mm of diameter (CONTINUED) Previous Conditioning Station (ECP) to a flow of 3.m 3 /s Ocean Outfall: 3,648 m of extension 5,9 m 3 /s capacity. Investment: R$ 260 million Implementation of New Outfall and Supplementary Works 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
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. Enterprises Benefits
GRAINS FRUIT- GROWING TOURISM INDUSTRIAL INFORMATION TECHNOLOGY Main Cargo Generating Sites PELTBAHIA Paths Towards Development PAPER/PULP
BA-093 Duplication - 23.3 km and Repair Services of de 81.7 km SALVADOR Feira de Santana Entre Rios Alagoinhas Simões Filho Camaçari Araçás Catu Pojuca BR-116 BR-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.
BR - 415 Duplication Location: Ilhéus – Itabuna. Extension: 27 km. Works: – –Duplication between Ilhéus – Itabuna. Investment: R$ 70 million (estimate).
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
EAST-WEST RAILWAY Location: Luís Eduardo Magalhães Municipality to road junction with FCA line at Malhada de Pedras near Brumado. Work: New railway segment implementation with 575 km extension. Investment: R$ 1.07 billion
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 System
(1) Municipalities:Itaberaba, Vitória da Conquista, Seabra, Irecê, Santo Antônio de Jesus and Eunápolis. Penitentiary System 1 prison unit in the capital 6 inland units (1)