BNDES guarantees US$ 11.3 billion financing for high speed train
Valor Econômico
The Federal Government will reduce the risks and costs of the concessionaire that will build and operate the Rio-São Paulo high speed train (HST) participating with direct capital, tax exemptions and financing guarantees given by the National Development Bank (BNDES). The bank's president, Luciano Coutinho, announced yesterday in São Paulo the economic model of the project and detailed the participation the Federal Government will have in the undertaking. The work, with total cost of R$ 34.6 billion (US$ 18.7 billion), will have R$ 20.9 billion (US$ 11.3 billion) of financing guaranteed by the BNDES, at a cost of TJLP (Long Term Interest Rate) plus 1% a year. The grace period will be 5.5 years, with a 30-year term for payment. According to him, the main difficulty reported by the interested companies was being able to get a loan, and this measure removes the uncertainty of the market.
With the direct capital, the public authority will undertake the whole cost with expropriation, at first calculated at R$ 2.3 billion (US$ 1.24 billion), besides getting into the business with an interest of R$ 1.1 billion (US$ 594.6 million) in the winning consortium. Coutinho says efforts are also being made in order to attract the interest of investment funds. The Government, however, will neither undertake the risk of the demand nor the risk of construction, which are expenses that may exceed the budget of the project.
Another incentive should be the tax exemption of the PIS (Social Integration Program), Cofins (contribution for the financing of social security) and ICMS (State Sales and Services Tax). According to Bernardo Figueiredo, managing officer of the Terrestrial Transportation National Agency (ANTT), the Government of Rio de Janeiro has already agreed to grant the exemption.
This way, the Government believes it will make the concession of the undertaking feasible. The rate ceiling will be R$ 0.60 (US$ 0.32) per kilometer for the first class, and the executive class should have a 75% surcharge over such price. The public tender, however, will be won by the lowest value to be financed by the BNDES, and not by the lowest rate, as it normally is. According to Coutinho, this is the most adequate option because it is a service that will suffer competition from other means of transportation, like buses and planes. In the case of the high speed train, since the Government will provide incentives, the choice for the most capitalized investor should be privileged.