PPP in BrazilPPP in BrazilCase StudiesCase Studies

Marcelo de Lima e SouzaPPP Unit – Economic Advisory

Ministry of Planning, Budget and Management

Mexico, February 24th 2010

PPP Case Studies

• Case studies• Datacenter Banco do Brasil• Pontal Irrigation Project• National Public Television Network

• General remarks

Datacenter Banco do Brasil

The Project

• The construction, operation and maintenance of a datacer building for Banco do Brasil e Caixa Econômica Federal (both government controlled banks)

• High standards facilities

The Project

• Private partner provides:• Facility infrastructure, and services

(security, cleaning, reception etc), energy, air conditioning

• Private partner is not responsible for the provision of computers• Computers are provided by the public

partners

The Project in Numbers

• Duration: 15 years• IT area: 5.000 square m• Demand risk: 0 (guaranteed by the public

partners• Additional revenues: Yes. 10% sharing

with the public partners• Winning Bid: R$ 880.000.000• Price reduction through competition:

about 15%

Pontal Irrigation Project

The Project

• Located in Petrolina, a pole of irrigated fruit production and exportation

• Total area 33,526 ha.,• 7,717 ha. of irrigable land

The Project

• Private Partner Obligations:• Finish construction, operate and maintain

common infrastructure (70% has been built by the government)

• Allocate land to private agribusiness• Run crops on the land, with total freedom to

choose the cultures• Integrate and provide technical assistance to

small farmers in at least 25% of the irrigated area

PPP Datasheet• Contract Duration: 25 years• Regulation: National Agency for Waters

(ANA)• Bidding weights Criteria:

• Integration of small farmers (65%)• Lowest governmental payments (35%), with a

maximum value of R$ 202.310.135,00

• Economic Incentives• Full occupation of the land must occur in no

more than 06 years• Most of the payment is due with the occupation

of the land and not only for potential water provision

• Scheduled bidding date: 29.03.2010

National Public Television Network

The Project

• Creation of the National Digital Public TV Network:– Private Partner will be responsible for

building and operating the network– Coverage will include all municipalities with

more than 100.000 people – Content will be provided by public TV

stations through EBC (Empresa Brasil de Comunicação), a government owned company

The Content1) Canal TV Brasil

i. TV Brasil HDTVii. 1Seg TV Brasil

2) Canal Multiplex Nacional 1i. TV Câmaraii. TV Senado 1iii. TV Senado 2iv. TV Justiçav. 1Seg Mux1vi. Secom/TV NBR

3) Canal Multiplex Nacional 2i. TV Escolaii. TV Professoriii. Canal Universidadeiv. Canal Saúdev. TV MinCvi. 1Seg Mux2

4) Canal Multiplex Locali. Legislativoii. Universitárioiii. Comunitárioiv. TV Pública Localv. Serviços e.govvi. 1Seg

The Network in Action

The Project

• Private Partner is responsible for construct, operate and maintain the network

• Government payments occur only when the service is provided• If the service is not provided or is provided in a

quality below the fixed minimum standard, no payment is made

• Additional revenues may be obtained by the private partner• 10% of these revenues will be shared with the

public partner to lower government payments

The Project in Numbers

General Remarks

Critical Issues to Consider in a PPP

• Contract specifications should be stable over time

• Specifications should be objective and easily measurable

• Dimension of investments • Risk allocation• Relevance of operation and

maintenance expenditures• Information about PPP

Competition is Crucial

• Private sector behavior may change dramatically before and during a bidding procedure

• Competition reduces government expenditures and increases the quality of the proposals

• Open auction induces competition

Thank You.

Marcelo de Lima e Souza

Ministério do Planejamento, Orçamento e Gestão

Tel: +55 61 2020-4944

Fax: + 55 61 2020-8084

E-mail: marcelo.l.souza@planejamento.gov.br