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São Paulo ranks fifth among states with most wildfires in August

Fires surge by 915% following a series of incidents last week, leaving situation still worrisome

08/29/2024

The number of wildfires reported in São Paulo this month has increased by 915% compared to the same period last year. The only state with a worse outcome was Mato Grosso do Sul, where fire incidents rose by 1,825%.

As a result, São Paulo is now the fifth state with the most wildfire outbreaks in the country (3,483) during the period from August 1 to 26—up from 13th place during the same period last year. Currently, the state is only behind Mato Grosso, Pará, Amazonas, and Mato Grosso do Sul, according to data from INPE (National Institute for Space Research).

The series of fires that struck the São Paulo countryside last week emerged almost simultaneously and in predominantly agricultural areas, according to a survey by IPAM (Amazon Environmental Research Institute) based on satellite-mapped heat sources.

Of the 2,600 heat sources reported in São Paulo between August 22 and 24, 81% occurred in areas used for agriculture, such as those occupied by sugarcane and pasture, according to a cross-analysis of satellite images from the environmental monitoring network with land cover and usage data from the MapBiomas network. Approximately 72% of São Paulo’s territory is occupied by agricultural activities.

Satellite images show the emergence of smoke columns within a 90-minute interval, between 10:30 am and 12:00 pm on August 23. The study strengthens comparisons between the incident in the São Paulo countryside and the so-called “Day of Fire,” mentioned by Environment Minister Marina Silva. She said that President Lula’s government is investigating whether the wildfires in the state have similar motivations to the criminally induced forest fires in August 2019 in the municipalities of Altamira and Novo Progresso, both in Pará state.

After two days without fires, São Paulo state recorded three new fire outbreaks on Tuesday (27th) in Batatais (350 km from the capital), in the metropolitan region of Ribeirão Preto, prompting a task force to combat the flames. Batatais is one of the cities on the state Civil Defense’s list of 48 municipalities on high alert for fires.

The outlook for the coming days remains concerning. The São Paulo Civil Defense has classified the metropolitan region of São Paulo as at emergency risk for fires this upcoming weekend.

According to meteorologists from the state agency, the classification is due to the hot and dry weather expected to return to the state starting this Friday (30th). With no rain in the forecast, the relative humidity in São Paulo city could drop to 20% over the weekend, according to INMET (National Institute of Meteorology), and temperatures are expected to reach 30°C in the capital.

There are four stages of warnings for fire risks: low (yellow), high (orange), alert (red), and emergency (purple).

The wildfires affecting different parts of Brazil may be linked to a historic lack of rain—the most severe in the last four decades—impacting 16 states and the Federal District.

The data comes from CEMADEN (National Center for Monitoring and Alerts of Natural Disasters), which considered information from May to August for all states since 1981, the year official records began.

Preliminary figures from the center for this August show that approximately seven out of ten Brazilian municipalities are affected by some level of drought: mild, moderate, extreme, or severe.

Meanwhile, Supreme Court Justice Flávio Dino ordered the federal government to mobilize, within 15 days, the Armed Forces, Federal Police, Federal Highway Police, National Force, Military Firefighters, and environmental enforcement agents to combat the wildfires in the Pantanal and Amazon—biomes that have been suffering from fires in recent days, with smoke spreading across the country. To fund the emergency actions, the federal government may open an extraordinary credit line through a provisional presidential decree.

Source: Valor International

https://valorinternational.globo.com/
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São Paulo toll road auction expected to draw investors

New contract provides for investments of R$10.4bn in construction

09/14/2022

Tarcila Reis Jordão — Foto: Silvia Zamboni/Valor

Tarcila Reis Jordão — Foto: Silvia Zamboni/Valor

The government of São Paulo is expected to hold the Noroeste Paulista lot auction this Thursday. It is the new bidding of two toll road concessions that are coming to an end: Tebe (controlled by engineering companies) and Triângulo do Sol (owned by Bertin and the Italian group Atlantia).

The lot includes 600 kilometers of roads, which connect cities such as São José do Rio Preto, Araraquara, São Carlos and Barretos. In all, the new contract foresees R$10.4 billion in capital expenditure in construction, in addition to R$4 billion in operating costs over the course of the 30-year contract.

Among the main interventions, 123 kilometers of road dualling, 99 kilometers of third lanes, 42 pedestrian overpasses, and others are planned. “The new concession is a mature asset from the standpoint of demand, but it needs to expand its capacity,” said Tarcila Reis Jordão, São Paulo’s deputy secretary of partnerships.

In the market, the forecast is that there will be at least one person interested in the asset. The São Paulo government believes there will be competition. “The expectation is very positive. There is a prospect of two to four bidders, which is very relevant for a R$10 billion investment project, on the eve of an election and after all these input price variations. We are excited,” Ms. Jordão said.

Pátria is pointed out as a strong candidate, due to the synergy that would exist with the road network already operated by the company. Last week, CCR told Valor that it would “most likely” compete for the asset. Ecorodovias has also hinted to the market about its interest in the project, although its high level of leverage is seen as a possible obstacle.

Besides these groups, Arteris and Acciona have analyzed the asset, according to sources. Arteris could also see synergies, but has not participated in auctions for years and was put up for sale by its shareholders, which reduces any expectation about it.

Ecorodovias said it seeks “projects that have synergy with the concessions portfolio and are aligned with sustainable growth guidelines.” Arteris says it “evaluates opportunities for new projects that fit the requirements of risk-return required by its shareholders.” Pátria and Acciona declined to comment.

A factor that helps to make the concession attractive, according to analysts, is that tolls are already charged on the highways, in addition to a known traffic history, which reduces the risk of demand and guarantees revenue generation since the beginning of the contract.

“The fact that these are highways that were in the hands of two concessionaires is well regarded. Besides the question of demand, there is more security in relation to the conditions of the roads than if they were operated by public agencies,” said Letícia Queiroz de Andrade, a partner at the law firm Queiroz Maluf.

Caio Loureiro, a partner at the law firm TozziniFreire, the perception that this is a low-risk project could even attract the participation of a new entrant.

In the bidding, the winner will be the one who offers the highest fixed concession payment, whose minimum value was set at R$7.6 million. In addition to this initial payment, the contract provides for a variable disbursement of 8.5% of gross revenue.

The funds from the variable fee should be mostly destined for an account that will serve as a “safety cushion” to mitigate the risks of toll default. The project foresees free-flow toll collection. In this system, there are no toll plazas, and the fee is collected electronically (through gantries), according to the distance traveled. The transition from the physical plazas to the system will take seven years.

The new concession foresees a 10% reduction in the value of the tariff in relation to the prices currently charged. For vehicles that use toll tags, there will be another 5% reduction. Besides this, the project foresees additional discounts for frequent users.

According to analysts, this auction will not necessarily be the last major highway bid this year. Mr. Loureiro, with TozziniFreire, points out that there are still expectations regarding other relevant federal projects: the auction of the BR-040 highway, between Minas Gerais and Rio de Janeiro; one or two lots of the Paraná highways; and the BR-381 highway, in Minas Gerais.

For Ms. Queiroz, the greatest demand today is for medium-sized projects, not large auctions. “The market is heated, there is interest mainly in smaller projects, in the states,” she said. Today, however, these initiatives are affected by the elections, which cast doubt on the continuity of the concessions.

*By Taís Hirata — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Commodities dominate exports even in São Paulo

Commodities: o que é e como funciona?

Commodities are grabbing an increasing share of exports across nationwide. In all regions, products related to agribusiness or the extractive industries ended the year dominating foreign sales. Soybeans have become the champion of shipments in ten states, crude oil or oil products are in the lead in three federative units and iron ore is now the main product exported in three others.

According to data from the Secretariat of Foreign Trade (Secex), the share of the manufacturing industry in Brazilian exports shrank to 51.3% in 2021 from 63% in 2010. This category also covers agribusiness products that undergo some type of industrial processing, such as meat, pulp and refined sugar.

Even São Paulo, Brazil’s most industrialized state, has its export basket led by commodities. Sugar ($5.6 billion last year) and crude oil ($4.3 billion) — whose production has soared in recent years because of the pre-salt layer — are the two goods most sold abroad. Embraer aircraft, the first purely industry item, came in third and contributed $2.3 billion.

In Paraná, passenger vehicle — which come at the front among manufactured goods outside agribusiness or extractive industry — are only the eighth most exported product. Also in eighth are shoes in the state of Rio Grande do Sul. Both states had soybeans as a prominent product in 2021.

For economist Paulo Gala, professor at the School of Economics at Fundação Getulio Vargas, the fact that the Brazilian map is now dominated by commodities allows for two thoughts. First: no state manages to have a sufficiently sophisticated exports agenda to have highly technological products — instead of grains, oil or minerals — as sales champions. Second: the Brazilian industry is predominantly focused on the domestic market and still lacks greater global competitiveness.

In his view, only a few micro-regions of the country — around cities like Campinas, Piracicaba (both in São Paulo), Caxias do Sul (Rio Grande do Sul) and Betim (Minas Gerais) — managed to transform themselves into “islands” of innovation and productivity, with leading industries. No wonder, he adds, they are among the municipalities with the highest per capita income.

“Only a few hubs have sophisticated export-oriented industries driving the local economy, but these hubs don’t come to dominate a entire state,” Mr. Gala said. “What brings jobs, income and reduced inequality is the production of complex goods. They require research and development, technology, patents. Embraer, WEG and Marcopolo are counterexamples of our incapacity for commercial insertion in the world,” he said.

According to the professor, not even the weakened real since the beginning of 2020 has been enough to avoid the loss of space of the industry in exports, compared to agribusiness and mineral extraction. “The weakened real helps price competitiveness, not quality competitiveness. The real exchange rate is at its lowest level in the last 20 years, but we need a much heavier science and technology policy and industrial stimulus,” he said.

The domination of commodities has intensified, said José Augusto de Castro, head of the Brazilian Foreign Trade Association (AEB). He estimates the deficit in manufactured products at $70 billion to $80 billion. On Monday, Secex unveiled a record balance of $61 billion in the balance of trade last year – obviously counting all kinds of products, not only those related to industry.

In his view, Brazil is now excessively dependent on three products (soy, oil and iron ore), which represent around 40% of total shipments, and on a single market (China) that buys 32% of our exports.

“In the 1980s, people complained a lot about the dependence on the United States, but the American market absorbed around 25% of Brazilian exports and there was more product diversification. At that time, eight of the ten main export items were manufactured goods. Now, the top 15 are commodities.”

In descending order, the 15 main products sold by Brazil last year were: iron ore, soybeans, crude oil, refined sugar, beef, soybean meal, fuel oils, chicken meat, pulp, semi-finished products or ingots of iron and steel, coffee, gold, corn, cotton and copper.

Therefore, Mr. Castro links the recent trade balance surpluses to the favorable price environment, not to the support of public policies. “The Brazil cost is still very high and the government has ended Reintegra [a program that reimburses companies for part of the taxes paid along the production chain], in addition to having reduced resources for financing exports, under Proex.”

Source: Valor international

https://valorinternational.globo.com/

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