Brazilian Investments Partnerships Program – PPI Scan the QR code to access the projects portfolio June, 2020
PPI works as a hub for investments National and international investors Sectorial Sectorial Unions Adds on efficiency and value to the process Ministries Financial Regulatory Agents Agencies ▪ Governance, coordination, (banks, investment funds, etc) monitoring and oversight ▪ PPI Transparency, dialogue, Legislative Multilateral credibility and predictability Branch Organizations ▪ Well-designed projects ▪ Control Technical and legal framework Concessionaries Entities enhancement Licensing Embassies Entities Subnational Governments 2
How Covid-19 impacted the power market, Discos effects and Covid account Brasília, junho de 2020
How Covid-19 impacted the power market? Brazil Fonte: CCEE
How Covid-19 impacted the power market? Next 5 years Fonte: CCEE, EPE e ONS
Discos effects Fonte: CCEE (modificado)
Main Economic / Operational Measures in the Power Sector (mitigating the risk of insolvency in the entire industry chain) • Exemption from the Social Energy Tariff for 10 million low-income consumers with revenues of up to 220 kWh/month (cost of 1.2 billion Reais, out of which 900 million Reais from the Treasury and 300 million Reais from the CDE). • Release of the System Service Charge resources, in the total amount of 2 billion Reais for the consumer segment. • Authorization of credit operations for Distributors (R$ 15 to R$ 17 billion), to be deferred in tariff processes over the next 4-5 years (including interest and charges) – Covid account
COVID ACCOUNT Temporary emergency Provided for the measures to address the Public Hearing on Covid Account creation of the Covid Covid 19 pandemic ANEEL's Draft Resolution Regulation Account impacts on the power sector Presidential 02 Decree 03 Normative Normative 01 04 Decree 10.350/2020 Resolution Draft Resolution 885 950/2020 6/23/2020 5/18/2020 4/8/2020 5/27/2020 R$ 16.25 billion (US$ 2.98 billion) Fonte: CCEE (modificado)
COVID Account Operation - Steps Fonte: CCEE *CAFT - Custos Administrativos, Financeiros e Tributários
BILL 5.877/2019 – Privatization of ELETROBRAS
STEPS OF ELETROBRAS PRIVATIZATION PROCESS Approval by the Concession Approval of Federal Court of contract the Draft Bill accounts signature Half 1/2019 Half 2/2020 Half 1/2021 Half 2/2021 Corporate Model Concession Capital approval of Definition fee payment increase the carried out capitalization model
Bill Main Goals CHANGING CHANGING WHAT STILL REMAINS CORPORATION LAW 10.848/2004 SHAREHOLDING • Public holding company of • Changing the quota regime • Privatization via issing new Eletronuclear and Itaipu for independent production shares through a holding • Government Programs • Revoking the provision company (Federal • Removing consumer • Light for All that excluded Government not included) Eletrobras and its hydrological risk • Procel-National subsidiaries from the • Pulverizing shares (Cap on • Earmarking part of the Electricity National Privatization the shareholders’ voting Conservation Program concession fee for reduction Program - PND power - 10%) • BUSA-Federal of charges (CDE) government goods under Eletrobras Management • Proinfa-Incentive Program to alternative sources
CORPORATE GOVERNANCE Private Public Entity Entity Government Programs
Current PPI Portfolio POWER SECTOR
Brazilian Investments Partnerships Program – PPI 158 PROJECTS + Current PPI Project Portfolio 13 policies Ports – 35 Railways – 11 Supply – 10 Energy – 14 4 PPP renewals 2 Privatizations 4 Privatizations 2 new PPP (Ceasaminas and Ceagesp) 2 Transmission Lines Auctions 8 Fishing Terminals 30 Port Terminals 4 investments in strategic 2 Privatizations (Eletrobrás Tourism – 4 (Cabedelo, Belém, Manaus, 1 Waterway (Licensing) railway and Nuclep) 4 PPPs of national heritage Aracaju, Natal, Santos, Cananeia 1 privatization - Ferroeste 6 Licensings ande Vitória) site s in PB, PE and SP Defense and Security 2 Existing Energy Generation ( PPP’s ) - 2 (A-4 and A-5) Airports – 24 National Parks and 2 New Energy Generation (A-4 Forests – 11 Policies: 1 Air force Communications and A-6) 22 airports in 3 clusters • “ Sea road ” - Cabotage 1 Police Communications 8 park PPPs (Lençóis 2 rebids: Natal + Campinas • TRIIP (Road passenger Maranhenses, Iguazu Waterfalls, Jericoacoara, Aparados da transport) Mining – 5 Economy – 5 Serra/Serra Geral, Canela, São Highways – 20 • PPP daycares Francisco de Paula, São Joaquim 4 CPRM Mining Right • PPP prisions + correctional and Brasília) ANM Available Areas 4 Privatizations ( ABGF, facilities 3 forest PPPs (Humaitá, Iquiri 11 PPP EMGEA, Serpro and Dataprev) • Universalizing basic and Castanho - AM) 1 Lottery (Fixed ratio) 2 Feasibilty assessments Communications and sanitation + solid waste (8,373 km) Technology – 5 • PPP street lightening 7 Licensing processes Regional Development - 5 Oil and Gas – 5 • The “ projects factory ” 3 Assessments for Privatization Round 17 concession 2 P rivatizations (CBTU and • Tourism Health – 2 H agreement Trensurb) ( Telebras, National Post, and EBC ) • UBS (health basic units) Shale Gas Fracking (Env. 2 assessments (PISF and Irrigation 1 Assessment (Fêmina 1 Liquidation (Ceitec) • BidSim – Oil Auctions Irecê) Licensing) Hospital/Porto Alegre) 1 Auction 5G • Strategic minerals ToR+ (Atapu and Sepia) 1 PPP (line 2 – BH subway) 1 PPP (Guarulhos Hospital/SP) Regular Offer
Energy Energy portfolio Existing Energy Generation (A-4 USD 2.15 billion* and A-5) New Energy Generation (A-4 and USD 2.98 billion* A-6) Transmission (# 1/20 and # 7/20) USD 2.29 billion Total USD 7.42 billion * Projection based on the replacement of 100% of the contracts due in 2024 and 2025, through greenfield plants ** Reference based on the results of A-4 and A-6 auctions, held in 2019 16
Auctions on Existing Energy (LEE) A-4 and A-5/2020 ▪ Brownfield and/or greenfield projects ▪ Investiments: depend on the total demand claimed by buying DISCOS and the size of winning plants ▪ Sources: Thermopower – national mineral coal and natural gas ▪ Contracts term for trading power (CCEARs): 15 years ▪ Auction criteria: lowest price for supplied energy (in R$/MWh), as per good/source and/or technology ▪ Status: in both auctions the public hearing stage has been accomplished (CP 042/2019) o Features: Auctions on existing energy A-4 and A-5, undertaken at least 4 or 5 ▪ Attention points: years before supplying is due, aim to make up for contracts deriving from ▪ Auctions have been suspended thorugh Ordinance MME 134, of new energy auctions carried out in 2005/2007, as well as those remaining March 28,2020; from the Thermopower Priority Program - PPT o Model: Authorization ▪ MME will assess the need for demand from distributors to decide o Sectorial Ministry/Grantor: MME whether to maintain the auctions later this year or postpone them to o Regulator: ANEEL 2021 (July / August). 17 Q4/19 Q1/20 Q2/20 Q3/20 Q4/21 Q1/21 Q2/21 LEE A-4/20 Postponing Qualifying at PPI Public Hearing LEE A-5/20 Auctions
Auctions on New Energy Generation(LEN)A-4 and A-6/2020 ▪ Greenfield project ▪ Investments: depend on the total demand claimed by the purchasing DISCOS and the size of the winning plants Foto ▪ Sources: hydropower, wind, solar and biomass power ▪ Contracts term for trading power in the regulated environment(CCEARs): 20 to 35 years ▪ Auction Criteria: lowest price of supplied (in BRL/ MWh), as per good/source and /or technology ▪ Status: LEN A-4 (Public hearing accomplished – PC 002/2020); LEN A-6 (under o Features: The A-4 and A-6 new energy auctions are the basis for assessment) expanding the Brazilian power system and aim to meet the demand ▪ claimed by the DISCOS to face the growth in their consumer market, Attention points: in the period of 4 and 6 years ahead ▪ auctions suspended through MME Ordinance No. 134, of March 28, o Model: Concession/Authorization 2020; o Sectorial Ministry/Grantor: Ministry of Mines and Energy ▪ MME will assess the need for demand from distributors to decide o Regulator: ANEEL whether to maintain the auctions later this year or postpone to 2021 18 (July / August). Q1/20 Q2/20 Q3/20 Q4/20 Q1/21 Q2/21 Q3/21 LEN A-4/20 Qualifying at PPI Postponing LEN A-6/20 auctions
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