Posts

Ecorodovias wins toll road concession in São Paulo

Group beat CCR and Pátria with R$1.2bn bid

09/16/2022

Ecorodovias won the auction of toll roads included in the Noroeste Paulista lot, held on Thursday. The company made a bid of R$1.24 billion in fixed concession to be paid to the government of São Paulo. The minimum price was almost symbolic, at R$7.6 million.

The market reacted very negatively to the news. Shares ended the trading session down 11.97%, at R$5.37.

The auction attracted two other groups. CCR made a bid of R$753.8 million, and asset management company Pátria offered R$321.3 million. Since the difference between the two competing bids and the winner was significant, the competition ended before the open outcry stage.

In addition to a fixed amount to be paid by Ecorodovias, the concession provides for variable fees of 8.5% of gross revenue, which will be paid throughout the 30-year contract. The company also has to invest R$10.4 billion and will foot R$4 billion in operating costs.

The new concession includes 600 kilometers of roads, which connect cities such as São José do Rio Preto, Araraquara, São Carlos and Barretos. This is a new auction for two contracts that are about to end: Tebe, which is controlled by engineering companies, and Triângulo do Sol, owned by Bertin and the Italian group Atlantia.

Marcello Guidotti — Foto: Divulgação/Ricardo Reis/B3

Marcello Guidotti — Foto: Divulgação/Ricardo Reis/B3

Asked about the financial impact of the new project, Ecorodovias CEO Marcello Guidotti said the contract will reduce the group’s leverage ratio in the first years since it will generate more revenue than debt in the short term.

“We studied this project very well. It is a mature lot, with consolidated traffic, and a very simple capex in terms of engineering. There are no major works or complexities. [Input] inflation is about to peak and there are signs of improvement. All this was taken into consideration,” the executive said.

The company has been expanding strongly in recent years. Since 2019, three relevant road concessions have been signed: Ecovias do Cerrado (BR-364/365), with at least R$2.1 billion of capex; Ecovias do Araguaia (BR-153), in partnership with GLP, with R$7.8 billion in capex; and the Rio-Valadares corridor, won this year, with R$11 billion in capex.

Besides the auctions, last year the group signed an agreement with the São Paulo state government, in which it obtained an extension to its concession for the Imigrantes highway and included R$1.5 billion of new construction work, against payment of R$613 million to the state.

In June this year, the group’s net-debt-to-EBITDA ratio reached 4.1 times – compared with 2.6 times one year before. The current level is seen as relatively high in this industry.

As a result, the company had been signaling that it would be more selective in auctions, prioritizing assets that offer synergies with its network and that generate revenue from the start – as is the case of Noroeste, since the roads already have toll collection.

Mr. Guidotti said that the company has “these metrics [of indebtedness] very much in check” and that the project fits the group’s strategy.

The executive also highlighted that the group is still interested in federal road projects that could potentially be launched this year: the lots in Paraná and BR-381, in Minas Gerais.

“They are our priorities. They are very likely to come out this year. Maybe [there will be a delay because] because of the election, but these are state plans, not government plans. These are very important corridors,” he said.

With the victory in the auction, Ecorodovias, controlled by the Italian group Gavio, is also consolidated as the main road operator in the country. The company, which was already the sector leader in terms of length of highways, now operates nearly 4,700 kilometers in Brazil.

The government of São Paulo celebrated the result. “We had the three largest highway operators competing in the auction, with a fierce competition, which is a reason for great pride,” said Tarcila Reis Jordão, the state’s deputy secretary of partnerships.

The state administration had canceled two road projects: Litoral Paulista, which was questioned by the state’s court of accounts, and the public-private partnership of Rodoanel Norte, which, in a first attempt, did not draw any interested buyer. The government has published the call for bids and scheduled a new auction for Rodoanel – a new section of the beltway around São Paulo –, but the decision on the competition will be left to the next administration. The competition has been scheduled for January.

*By Taís Hirata — São Paulo

Source: Valor International

https://valorinternational.globo.com/
/by

Auction of ultra-deep oil areas likely to draw competition, regulator says

Petrobras, Petronas, BP, Shell and Chevron showed interest; number of companies registered is seen as a positive sign

08/31/2022

Rodolfo Saboia — Foto: Leo Pinheiro/Valor

Rodolfo Saboia — Foto: Leo Pinheiro/Valor

The auction of ultra-deep pre-salt areas, scheduled for December, is likely to draw competition for the assets, said Rodolfo Saboia, the director general of the National Petroleum Agency (ANP). The number of companies registered to participate in the contest and the speed with which they expressed interest are positive signs, according to him.

“Everything indicates that there will be a good dispute. The [oil barrel] prices are high, and the assets are good. As soon as the call for bids was ready, there were expressions of interest from the companies. We expected that because we trust the quality of what is being put up for auction,” Mr. Saboia told Valor during the Offshore Northern Seas (ONS), the largest energy event in Europe, in Stavanger, Norway.

The auction scheduled for December 16 will be the first to auction blocks under the production sharing regime through the permanent offer – an ANP auction that is called only after companies show interest in the areas. In all, 11 blocks will be auctioned. Petrobras, Petronas, BP, Shell, Chevron, CNODC, CNOOC and TotalEnergies are the companies registered to participate.

Despite the discussions regarding the transition to a low-carbon economy, the world will still need fossil fuels, Mr. Saboia said. “Without enough renewable sources to replace fossil fuels, we will continue with fossil fuels. We can’t compromise energy security, as 84% of global energy still comes from fossil sources,” he said.

Regarding the supply of fuels in Brazil, Mr. Saboia said that the current energy crisis in Europe, which suffers from sanctions on Russian exports, can have an impact on Brazil, but stressed that at the moment there are no signs of supply problems yet. “Imports are happening in a normal way. There is no reason at this moment to believe that there will be any shortage of these products,” he said.

Mr. Saboia recalled that ANP monitors the fuel market in the country, including demand, supply, stocks and new import contracts. “These purchases are made well in advance and are expected to arrive up to a month and a half ahead, so at the moment we have no expectation of shortage,” he said.

The reporter’s travel costs were covered by Norwegian Energy Partners and Innovation Norway.

*By Gabriela Ruddy — Stavanger, Norway

https://valorinternational.globo.com/
/by

Auction of São Paulo beltway expected to draw interest

Sao Paulo Metropolitan Beltway

The São Paulo state government is expected to auction on Wednesday the northern stretch of Rodoanel Metropolitano. With the new concession, the expectation is to finally conclude the construction of the beltway of Greater São Paulo, which began in 1998.

The contract provides for R$3 billion in investments over 31 years. Of this amount, R$1.7 billion will be used to complete the work – about 25% of the northern stretch, which is 44 km long and passes through São Paulo, Guarulhos and Arujá, has yet to be built. The beltway is expected to be fully delivered in two years.

The project will be a public-private partnership (PPP), a model in which the government contributes part of the funds. In total, the state of São Paulo is prepared to inject around R$2 billion (excluding monetary corrections): in addition to an initial contribution for the work, of up to R$876.7 million, the project includes annual payments to the concessionaire of up to R$41.65 million.

However, the amount disbursed by the government may fall, depending on the level of competition. The winner will be the one offering the biggest discount on the public contribution. According to the public notice, the interested parties must propose a discount on the value of the annual payments. If this reaches 100%, the discount on the initial contribution becomes valid.

The perception in the market is that there will be interest in the project, despite the challenging scenario. Traditional operators such as CCR, Ecorodovias and Pátria are seen as candidates.

Ecorodovias has not cited Rodoanel on its list of priorities. However, the group is considered a possible interested party because it won the first auction of the stretch, held in 2018. At the time, the bid notice only provided for the operation of the road, since the work would be completed by the state government. In the end, however, the contract was not signed and the model was changed.

CCR already operates the Rodoanel Oeste (west stretch) concession and, therefore, reportedly has synergies with the northern stretch. Another company in this situation is Bertin group’s SP Mar, which operates the south and east stretches of the beltway. Although the concessionaire is under protection from creditors, analysts do not rule out an attempt to dispute the asset through a consortium.

Ecorodovias and Pátria declined to comment. SP Mar says it has not made a decision and is awaiting a response from shareholders and investors. CCR did not reply to a request for comment.

“The expectation is for competition. Although it is not common in São Paulo, the PPP model for highways is well seen among companies, due to the state’s history of being a good payer and other successful experiences with projects in this model,” said Rafael Vanzella, a partner at law firm Machado Meyer.

For Eduardo Ramires, a partner at Manesco Advogados, a limited dispute is expected. He points out that, besides the project’s challenges, such as expropriations and environmental issues, there is an unfavorable situation aggravated by the war in Ukraine that puts pressure on the construction costs and generates uncertainty regarding the highway’s traffic. In addition, he highlights the risk for the new concessionaire of taking over a work largely built by third parties. “The operator assumes responsibility for the work already done. This succession always raises concern,” he said.

In relation to this point, the São Paulo state government has highlighted the hiring of an independent report prepared by Instituto de Pesquisas Tecnológicas (IPT) on the state of the works. In addition, in a period of six months after the signing of the contract, an independent firm will be able to point out possible divergences in relation to the structure, which will be taken to a technical commission.

The São Paulo state government has been trying to get the Rodoanel Norte highway off the drawing board for at least 10 years, during which time more than R$7 billion have already been spent. In addition, the project was targeted by the anti-corruption task force Car-Wash Operation and marked by investigations for suspected embezzlement.

In 2012, when the first tender for the Rodoanel Norte was held, the project was divided into six lots, which were won by construction companies such as Mendes Júnior, OAS, Acciona and Construcap. In view of the delays, the six contracts were terminated – three of them at the end of 2018, and the others in May 2019.

Besides the inclusion of the work in the contract, another point of attention in the project is the inclusion of the “free flow” collection system (no toll plazas and payment calculated by kilometers driven), still innovative in the country, said André Bogossian, a lawyer with Stocche Forbes.

“There are doubts about how the payment and default will be, because there is no culture of automatic payment in the country,” he said. He highlights that, to mitigate this uncertainty, the São Paulo state government included risk sharing mechanisms in the call for bids.

Source: Valor International

https://valorinternational.globo.com

/by

Auction for offshore wind power to be held next year

Potential investors in the offshore wind power segment are waiting for regulatory definitions from the federal government to start the race for new projects in Brazil’s waters with the usual legal certainty of the electricity sector.

The Brazilian Wind Power Association (Abeeólica) says it is eager to see the regulatory guidelines for offshore wind contracting, as investors in the international market are interested in Brazil. The entity helps in the economic and regulatory structuring to receive the investments and believes that in 2023 it will be possible to make the first competition viable.

“What we did in 2021 and will continue to do in 2022 is to arrange the economic and regulatory structure to receive the offshore investments. We already have companies in Brazil and 46 GW of projects under analysis by [federal environmental agency] Ibama. We will provide structure so to hold auctions in the near future, which I imagine will be in 2023,” said Elbia Gannoum, head of Abeeólica.

The Ministry of Mines and Energy (MME) is working with the Chief of Staff Office to consolidate contributions for the establishment of the first offshore wind power regulation in Brazil. “The work is likely to be concluded by the end of this month,” the ministry informed.

Some companies have actively collaborated in the discussions for the definition of the legislation to be adopted in the country, such as Neoenergia, whose majority shareholder is the Spanish company Iberdrola. With a defined legal framework, the expectation is that projects will move forward.

“We have three projects in the initial phase of licensing studies with the possibility of reaching a capacity of up to 9,000 MW,” the company said in a note.

Even big oil companies are looking to Brazil. Shell Energy has been evaluating the country’s offshore wind potential using its knowledge of the sea environment and with the deployment of those plants outside Brazil, and is also waiting for the regulation of the sector.

“Shell expects to soon report the start of environmental licensing of offshore wind complexes with Ibama, a field in which regulation is already known to entrepreneurs,” said Gabriela Oliveira, renewable energy generation project development manager at Shell Energy.

Ibama has 23 requests for environmental permits under analysis, totaling more than 46 GW of power. However, the institute confirmed that only two have presented Environmental Impact Studies and Environmental Impact Reports (EIA/Rima). The agency has requested further information for the others.

Ana Karina Souza, partner for energy at law firm Machado Meyer Advogados, adds that the projects would have many challenges to be implemented without a stronger intention of the federal government to hold auctions in the regulated market. This gives room to doubts whether the projects would be viable in the free market.

“We have a technology that cannot be developed because of a void, of a regulatory gray area,” she said.

Other structural conditions still need to be overcome. Brazil needs to fix the infrastructure of ports and transmission, since the projects have a very large scale, and the recovery of the economy needs to come with strength so that investments accelerate.

Source: Valor international

https://valorinternational.globo.com/

/by