BRAZIL: YOUR GATEWAY TO BUSINESS AND INVESTMENT

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1 BRAZIL: YOUR GATEWAY TO BUSINESS AND INVESTMENT Investment: Brazil the Hosting Country of World Cup and Olympic Games Tel-Aviv - December 11, 2011 Giancarlo Gerli Director

3 COVERED AREAS INFRASTRUCTURE AND BASIC INDUSTRY ELECTRIC POWER OIL, GAS AND PETROCHEMICAL TRANSPORT WATER AND SANITATION PAPER/PULP STEEL MINING TELECOM

4 INTERRELATED AREAS GOODS AND SERVICES FOR INFRASTRUCTURE AND BASIC INDUSTRY ENGINEERING SYSTEMS / EQUIPMENTS CONSTRUCTION ASSEMBLY INVESTORS SERVICE OPERATORS OTHER SERVICES

KEY FIGURES MEMBERS 144 2010 REVENUE 321

5 KEY FIGURES MEMBERS REVENUE 321 US$ billion (15% GDP) DIRECT JOBS 372,000

US$ billion ACTUAL INFRASTRUCTURE INVESTMENT 83.3 13.5 17.0 25.8 31.6 43.2 59.

7 US$ billion ACTUAL INFRASTRUCTURE INVESTMENT Exchange rate = annual average dollar.

US$ billion ACTUAL INFRASTRUCTURE INVESTMENT 2003 2010

8 US$ billion ACTUAL INFRASTRUCTURE INVESTMENT (2010 prices) Transport Electric power Oil and gas Telecommunications Water and sanitation Exchange rate= annual average dollar.

9 INVESTMENT REQUIREMENTS IN INFRASTRUCTURE ELECTRIC POWER OIL AND GAS (*) TRANSPORT/ LOGISTICS TELECOMMUNICATIONS WATER AND SANITATION TOTAL US$ 80.7 b US$ b US$ 97.7 b US$ 56.0 b US$ 48.3 b US$ b (*) E&P, downstream, gas and energy. Exchange rate: 1 US$ = 1.76 R$

GENERATION Expansion plan will increase the installed capacity (118,400 MW) with additional 45,600 MW

11 OPPORTUNITIES AND PLANS BY SECTOR ELECTRIC POWER 10-YEARS EXPANSION PLAN (2010/2019) This expansion plan has an integrated vision of the demand expansion and different available sources. GENERATION Expansion plan will increase the installed capacity (118,400 MW) with additional 45,600 MW (23% renewable). TRANSMISSION Physical expansion of the transmission system is expected to happen with additional 36,791 Km

state Shipyard and Systems Modernization and Expansion of Transpetro (Petrobras subsidiary company) fleet

12 OPPORTUNITIES AND PLANS BY SECTOR OIL & GAS E & P After-Salt areas 11th Bid Round 174 blocks (expected in 2012) 87 off-shore 87 on-shore Pre-Salt area New frontiers Basins in Santos, Campos and Espirito Santo state Shipyard and Systems Modernization and Expansion of Transpetro (Petrobras subsidiary company) fleet Demand for building and/or leasing of: Drilling equipments, production platforms, special and support ships

OPPORTUNITIES AND PLANS BY SECTOR TRANSPORT NATIONAL PLAN FOR LOGISTICS AND

expansion from 28,830 Km to 44,720 Km (load) Passengers: High Speed Train

13 OPPORTUNITIES AND PLANS BY SECTOR TRANSPORT NATIONAL PLAN FOR LOGISTICS AND TRANSPORT Goal: to recover investment level in infrastructure, addressing 1% of GDP at least, over Roadways: conservation and expansion of network Railways: restructuring and expansion from 28,830 Km to 44,720 Km (load) Passengers: High Speed Train (São Paulo / Campinas / Rio e Janeiro): 511 km - Expected investment : US$ 23 B Public hearings planned for February 2012

14 OPPORTUNITIES AND PLANS BY SECTOR Ports TRANSPORT NEW PROJECTS PLANNED: A new plan addressed by the regulatory agency indicates 19 areas along the Brazilian coast where to develop and build new ports. Private sector is also expected to invest and operate. The first project will be set in Manaus (Amazonas State, North Region) involving US$ 795 million.

15 OPPORTUNITIES AND PLANS BY SECTOR Airports TRANSPORT Investment plan (2009 to 2014) Infraero, federal state-owned company, has released an investment plan for 16 airports with an amount of US$ 5.6 billion. Bidding processes under way or about to happen. Private sector new opportunities The federal government started the concession model adoption in the Brazilian airport system. Private utilities will be responsible for investment and operation in a partnership with Infraero. First airport concession: São Gonçalo do Amarante Airport (city of Natal ) in the State of Rio Grande do Norte (Northeast). Auction done in Aug 22th. Next airports: Sao Paulo International, Campinas (São Paulo) and Brasília are scheduled to Dec 22th.

16 OPPORTUNITIES AND PLANS BY SECTOR WATER AND SANITATION National Plan for Water and Sanitation: Federal Government has built a plan (now under final hearings) that aims at universalizing the access to services of water and sanitation in 20 years (2030). Investment requirements: Goal is to provide water and sanitation infrastructure for 100% of the population. US$ 9.6 billion/year until 2030 or US$ 11.4 billion/year until 2025.

17 OPPORTUNITIES AND PLANS BY SECTOR TELECOMMUNICATIONS UNIVERSALIZATION OF TELECOMMUNICATION SERVICES New contracts were signed between regulatory agency and private companies to extent infrastructure and services even to small communities in the country. Challenge to merge internet, broad band, TV and telephony

18 OPPORTUNITIES AND PLANS BY SECTOR PAC II ( ) Overall Projected Investment (R$ Billion) Segment Beyond 2014 Total For a better city (water & sanitation + urban mobility ) For the community (healthcare + education) My home, my life (housing) Water and Light for all Transport / Logistics Energy Source: Federal Government. TOTAL ,590.6

19 OPPORTUNITIES AND PLANS BY SECTOR PAC II ( ) INFRASTRUCTURE AREAS Projected investment (R$ billion) Segment Beyond 2014 Total Urban infrastructure (water & sanitation + urban mobility) Water and Light for all Transport and logistics Energy ,092.6 TOTAL ,289.3 Source: Federal Government.

20 OPPORTUNITIES AND PLANS BY SECTOR PAC II ( ) Urban Infrastructure (R$ billion) W &S: water 13.0 W & S: sewage 20.0 W & S: drainage 10.0 W & S: waste mgmt 1.5 W & S: project development 0.6 Total Water & Sanitation 45.1 Urban mobility (large cities) 12.0 Source: Federal Government. TOTAL 57.1

21 WORLD CUP 2014

22 WORLD CUP 2014 May 13, 2008 Ministry of Sports and CBF (Brazilian Soccer Confederation) sign a Technical Cooperation Agreement with ABDIB March 2009 ABDIB Study concluded : Infrastructure Demand to handle World Cup 2014 in 18 candidate host cities. Emphasis on structuring projects (multiplying factor) LEGACY

WORLD CUP 2014 Required Actions in 9 areas City Requirements Infrastructure for airports and ports Allowing transfers of delegations, tourists and supporters in a fast and efficent way Infrastructure

23 WORLD CUP 2014 Required Actions in 9 areas City Requirements Infrastructure for airports and ports Allowing transfers of delegations, tourists and supporters in a fast and efficent way Infrastructure for roads Enabling connections among airport / hotel / stadium Water & Sanitation Power Telecommunications Hotel network Able to meet demand Touristic and economic potential in the region Hospital network (public and private) Public Security 23

24 WORLD CUP 2014 GAP ANALYSIS Explanation Urban Mobility Airports Hotel network Power Telecomm. Hospital network Water/ Sanitation Security A A Ports A B A A A A A A B B B B B B Key Indicators- Minimum level B B Key Indicators - Ideal level Candidate cities A B Minimum Level Ideal level Actual status Estimated status in 2014 with existing projects Gap still open to be closed with recommended additional projects Minimum level of requirements to be a host city for 2014 World Cup Ideal level to enable a city to host any game in 2014 World Cup, independently of the phase

25 WORLD CUP 2014 Estimated Investment Volume (US$ Million) Dimension Projects Amount URBAN MOBILITY , AIRPORTS 38 4, PORTS ELECTRICAL POWER 128 1, WATER & SANITATION 186 7, HOTEL NETWORK 132 7, HOSPITAL NETWORK SECURITY 63 2, STADIAS / ARENAS 12 3, TELECOMMUNICATIONS 30 2, Total ,914.01

26 WORLD CUP 2014 Investment Potential by Host-Cities Host City R$ Million MANAUS 6, SALVADOR 8, FORTALEZA 6, BRASÍLIA 6, BELO HORIZONTE 11, CUIABÁ 2, RECIFE 5, CURITIBA 6, RIO DE JANEIRO 18, NATAL 5, PORTO ALEGRE 7, SÃO PAULO 34, Total Brazil 120, Manaus Curitiba Cuiabá Fortaleza Natal Recife Salvador Brasília Belo Horizonte Rio de Janeiro São Paulo Porto Alegre

27 WORLD CUP 2014: Arenas and Host cities

28 WORLD CUP 2014: Arenas and Host cities

WORLD CUP 2014 Airports INVESTMENT PLAN (2010-2014) Investment Amount (R$ Million) São Paulo (Viracopos, Guarulhos) 2,139.8 Rio de Janeiro (Galeão, Santos Dumont) 863.

29 WORLD CUP 2014 Airports INVESTMENT PLAN ( ) Investment Amount (R$ Million) São Paulo (Viracopos, Guarulhos) 2,139.8 Rio de Janeiro (Galeão, Santos Dumont) Belo Horizonte (Confins) Porto Alegre 1,208.3 Curitiba Brasília Cuiabá 90.4 Manaus Fortaleza Salvador 44.4 Natal Recife 19.8 TOTAL AIRPORTS 7,328.4

30 WORLD CUP 2014 City Project Objectives Belo Horizonte WATER AND SANITATION INVESTMENT PLAN ( ) Investment on the Sewage System for BH Metropolitan network Expansion and improvement of the current Sewage System Cuiabá Increase in the Sewage Collection Expansion of sewage tunnels Curitiba Reduction, Disposal and recovery of solid waste Actions aiming at reducing waste generation and implement adequate disposal Fortaleza Implementation of the Cocó Macro System (Sewage) Cover 80% population Natal Implementation of collection network and ocean outfalls in Nothern region Cover 100% population via sewage network Porto Alegre New water collection Reduce cost of chemical products for water treatment Recife/Olinda Capibaribe Basin Re-urbanization, creation of new public areas and streets 36 boroughs in the western area improvement of environmental conditions in the Capibaribe basin Rio de Janeiro Sewage Expansion of the sewage collection and treatment for Rio Marangá basin, improving coverage. Salvador Expansion of the Sewage system - collection, pumping stations, home connections - Bacias do Comércio, Aratu- Macaco, Jaguaribi, Calafate 1 e 2, Alto do Camurujipe 1 e 2, Tripas, Saboeiro, Mangabeira e Península

WORLD CUP 2014 Ports INVESTMENT PLAN (2010-2014) Investment Amount (R$ Million) Project Description São Paulo (Santos) 119.9 Pier improvement and internal access Rio de Janeiro 314.

31 WORLD CUP 2014 Ports INVESTMENT PLAN ( ) Investment Amount (R$ Million) Project Description São Paulo (Santos) Pier improvement and internal access Rio de Janeiro Implementation of 3 Piers Manaus 89.4 Adaptation of 3 Storage Depots to Passenger Terminals, restauration of luggage storage, pier expansion, front-area urbanization with parking lots and passangers crossways. Natal 53.7 Adaptation of old installations to Passenger Terrminals, Pier expansion, area urbanization with parkings and better accesses Fortaleza (Mucuripe) Construction of Passenger Terminal, new pier pavement, area urbanization with parkings and better accesses Salvador 36.0 Adaptation of old installations to Passenger Terrminals, Pier expansion, area urbanization with parkings and better accesses Recife 21.8 Adaptation of a storage Depot and construction of a new passenger Terminal, pavement, and area urbanization with parkings and better accesses TOTAL PORTS 740.7

32 WEBSITE FOR THE WORLD CUP 2014

33 OLYMPIC GAMES 2016

OLYMPIC GAMES 2016 POTENTIAL INVESTMENT IN INFRASTRUCTURE Area Investment (US$ million) Investment COJO * (US$ million) Total (US$ million) % Olympic Villages Sport Installations 1,270.25 0.0 1,270.

34 OLYMPIC GAMES 2016 POTENTIAL INVESTMENT IN INFRASTRUCTURE Area Investment (US$ million) Investment COJO * (US$ million) Total (US$ million) % Olympic Villages Sport Installations 1, , Security Technology Transport 3, , Total 5, , % *COJO = Organization Committee for the Games

35 OLYMPIC GAMES 2016 AGENDA Actions planned for the Olympic Games 2016 are perfectly connected with those for the Word Cup in Major projects in Rio include: Implementation of street works, special works, micro and partial drainage and / or adjustments in existing streets, to facilitate access to huge sports events; Reurbanization in areas sorrounding Maracanã and the harbour, with a great and significant social impact in installations, housing and transport; 35 Corredor T5 - Barra da Tijuca Penha (Bus Rapid Transit);

36 OLYMPIC GAMES 2016 AGENDA Express corredor connecting Lagoa with Barra boroughs; Connection between Deodoro and Barra boroughs (BRT); Connection Barra and Penha (BRT); Rio Olympic Park; Olympic Centers; Media Village in Barra area; Olympic Village; Main Press Center and International Broadcasting Center Sponsors Village and Live Site. 36

38 MARKET VALUE OF INFRASTRUCTURE COMPANIES 1,000,000,000, ,000,000,000 August 2008 October 2011 (stocks in R$) 765,378,921, ,000,000, ,120,306, ,000,000, ,000,000, ,000,000, ,000,000, ,171,527, ,000,000, ,000,000, ,535,852, ,000,000,000 0 Total with Petrobras Total without Petrobras Source: Bovespa (São Paulo Stock Exchange) Elaboration: Abdib

39 EXTERNAL INVESTMENT IN INFRASTRUCTURE

40 INFRASTRUCTURE INVESTMENT FUNDS Operating funds: AG Angra Infraestrutura: W&S + infrastructure sectors FIP Brasil Energia: energy and renewable energy Infra Brasil FIP: W&S + transport, energy BRZ Logística : transport FIP Caixa Ambiental: W&S FIP Energia PCH: Small Hydro and Thermal plants FI FGTS : all infrastructure sectors Note: Committed Capital = US$ 6.3 billion

41 How to get funding for investment? New rules, approved last June and already in practice, offer suspension of income tax or reduction to zero for investment in infrastructure One goal: enhance infrastructure investment by tax reduction for domestic and foreigner investors. Another goal: improve a long term private funding for infrastructure projects and help public banks in the effort to provide additional long term funding for the sector.

42 BNDES FINANCING BY ECONOMIC SECTORS Original values, in R$ billion Economic sector Agrobusiness Industry Basic industry Services and Retail Infrastructure Total Basic industry (%) in global outlays Infrastructure (% ) in global outlays Source: BNDES (Social and Economic Brazilian Development Bank)

43 FINAL MESSAGE Investors in World Cup 2014 are twice welcome: They can cooperate to a very important event from both social and economic point of view Projects legacy will equally benefit society and those who accomplished them or helped in their accomplishment 43

44 ASSOCIAÇÃO BRASILEIRA DA INFRAESTRUTURA E INDÚSTRIAS DE BASE THANK YOU! Thank you! abdib@abdib.org.br