Rio | The Return of the New Van Plan

Black-market van stuffed with 10 armed, ninja-style black-clad corpses, December 2007, Rio de Janeiro

Source: O Globo — Portal ClippingMP.
Translation: C. Brayton

A follow-up to Rio Has New Man With Plan for Van, from 2007.

That year, fierce feuds over turf and market share broke out among the militias and drug traffickers who shake down independent operators of vans and mototaxis for «tolls» and «insurance».

It makes you wonder: are such measures also aimed at undermining the economic base of the milícia — cohorts of current and ex-police who invade territory neglected by the state and impose a mafia-style discipline — in these areas.

Probably. Ferraz, the special secretary of supplementary public transportation, made his bones pursuing the militias of Rio. He is also the author of the novel that formed the basis of the film Tropa de Elite |  Elite Squad 2.  The official announcement, from December 2007:

On December 5. Rio de Janeiro mayor Eduardo Paes announced the creation of a special office of supplementary public transportation, led by state judicial police official Cláudio Ferraz, former commander of the anti-organized crime bureau that has pursued the militias of Rio.

The Ban on the Van

Deals on Wheels | The Railway Pipeline

Source: Portal ClippingMP.
Authorship: Guilherme Soares Dias | Valor Economico

I have recently received an incentive to closely and constantly keep an on the Brazilian transportation sector as a whole — not just what the ALLs and LLXs are up to.

Intercity passenger trains are being readied to circulate again in at least nine Brazilian states with plans under active study. In most of these cases, the intention is to reuse existing freight lines for medium-velocity passenger service. The plans provide for management by private sector concessionaires and ticket prices competitive with intercity buses, in a attempt to take some of the strain off crowded highways.

Brazilian roadways — constantly subject to apocalyptic weather conditions, let it be said — are a nerve-wracking way to get around, although mirabile dictu the rodoviários — bus stations — hum industriously all year long, and especially around Christman, when Northeastern families make the trek to be temporarily reunited.

In all, 1,900 km of so-called “regional trains” will get off the drawing board sometime this year. The federal ministry of transport has detailed plans for six stretches of railway, while SUDECO — the Superintendency of  Center-West Development examines two rail lines in the Brasília region. The state of Minas Gerais is studying three new lines and São Paulo is planning another five.

After a study by BNDES, the national development bank, issued a list of  64 railway lines that could be used to move passengers, the transport ministry chose 14  priority project for evaluation in 2011. Two years later, six of these are underway under the auspices of BNDES and one another, under construction by the state of Minas Gerais, should be ready by the the end 2Q13.

After the studies are conducted, the proposals will be opened up to public discusion, after which the transport ministry intends to assess tender offers for projects starting in 2014. Bids closest to completion so far include the Londrina-Maringá connection, in  Paraná, and the Bento Gonçalves-Caxias do Sul connection, in Rio Grande do Sul, where feasibility studies have been conducted and public audiences will begin next month in which residents and local governments will have their say.

According to Euler Costa Sampaio, coordinator of studies on regional and passenger rail in the transportation ministry, the rail lines will likely operate on the basis of a Public-Private Partnership or a concession model. “We want to take advantage of the new rules for the railway sector, which instituted right of way [for passenger trains] on freight train lines,” he said..

Along certain stretches, such as the connection  Londrina-Maringá, the plan is to create a double-track road, given the heavy cargo loads resulting from the line’s proximity to the Porto of Paranaguá. Studies will show that demand will be sufficient for an all-passenger service, says Sampaio. Estimated demands runs around 36,000 passengers a day and 13 million passengers a year.

Another challenge for the regional lines will be entering urban zones, in places where they might cross paths with municipal transport. “We will have to provide quality and accessibility in order to compete with the interstate bus lines. Fairs will have to be in line with what it costs to travel by bus”, a Transportes official said.

In some cases, such as the Salvador-Alagoinhas connection in Bahia, whose study will be filed in June, indications are that the rail line can be extended another 40 km to Feira de Santana. With its  568,000 inhabitants, the city is the second most populous of Bahia state and is connected to Salvador by Highway BR-324, which sufferes from intense passenger and cargo traffic.

Another stretch of track featured in the  Sampaio reporte is the São Luís-Itapecuru-Mirim triangle, in the northern state of Maranhão, where the largest petrochemical center in the Northeast is under construction.

In addition to the six rail linkages already under study, the transport ministry expects to contract studies for another six: São Cristóvão—Laranjeiras (SE), Recife—Caruaru (PE), Campos—Macaé (RJ), Itajaí— Rio do Sul (SC), Campinas—Araraquara (SP), Santa Cruz—Mangaratiba (RJ), and Bocaiúva—Janaúva (MG).

Os projetos preveem que os trens atinjam de 80 a 140 quilômetros por hora para encurtar, em alguns casos, o tempo de percurso atual. É o caso do trecho entre Brasília e Goiânia que teria viagens de 50 minutos, enquanto as de carro e ônibus duram de duas a três horas. O trecho é estudado pela Sudeco. A linha seria de uso misto, sendo aproveitada para transporte de cargas, com ligação da Ferrovia Norte-Sul em Anápolis (GO), onde está prevista uma parada.

O diretor-superintendente da Sudeco, Marcelo Dourado, ressalta que 6 milhões de pessoas moram no entorno da futura linha e devem ser beneficiadas pelo novo modal de transporte. Ele destaca ainda que haverá melhora no escoamento de produção do agronegócio. A região concentra o segundo Produto Interno Bruto (PIB) meso-regional só perdendo para Rio-São Paulo.

“Essa ligação mais rápida vai incentivar a industrialização e a conurbação da região”, acredita Dourado. Os estudos estão sendo concluídos e a intenção do órgão é que a licitação ocorra até o fim do ano, as obras comecem em 2014 e sejam concluídas em até sete anos. O custo estimado é de R$ 1 bilhão. A Sudeco estuda ainda a ligação entre Brasília-Luiziânia (GO), onde já existe linha férrea e seria necessária adaptação para o trem de passageiros. “Essa seria uma intervenção mais rápida e barata. Seriam necessários dez meses e R$ 90 milhões de desembolsos para viabilizar a linha”, afirma Dourado. O trecho seria atendido por um Veículo Leve sobre Trilho (VLT). De acordo com o superintendente da Sudeco, os dois projetos têm chegada prevista na rodoferroviária da capital federal e devem desafogar as rodovias do Distrito Federal.

O governo federal prevê ainda estudos de um trem ligando as cidades do Triângulo Mineiro e outro mais ousado, da Superintendência do Desenvolvimento do Nordeste (Sudene), que planeja o “Trem da Costa Dourada”, linha de 2 mil quilômetros ligando Salvador ao Delta do Parnaíba (PI) pelo litoral, passando pela maioria das capitais do Nordeste. Apesar do apelo turístico do projeto até mesmo os estudos encontram dificuldade para sair do papel. “O Ministério do Turismo tinha se comprometido a bancar, mas ainda não conseguimos a liberação da verba. Agora estamos negociando com o governo espanhol para financiar os estudos”, diz o superintendente da Sudene, Luiz Gonzaga Paes Landim. Ele garante que o trem é viável e afirma que o projeto poderia ser “fatiado”, com início nos trechos de maior apelo turístico como Salvador -Praia do Forte (BA), Recife-Porto de Galinhas (PE), Natal-Praia da Pipa (RN) e Fortaleza-Canoa Quebrada (CE).

Para o coordenador de transporte de passageiros do Laboratório de Transportes e Logística (LabTrans/UFSC), Rodolfo Philippi, os projetos atuais estudados pelo Ministério dos Transportes terão viabilidade reforçada pelo transporte urbano, uma vez que o aproveitamento de linhas já existentes vai possibilitar estações no centro das cidades. “Em locais maiores como Londrina, Maringá e Caxias do Sul poderá haver mais de uma estação incentivando o locomoção das pessoas dentro das cidades”, diz.

Já o presidente da Associação Brasileira da Indústria Ferroviária (Abifer), Vicente Abate, recorda que nas décadas de 60 e 70 os trens de passageiros chegaram a transportar 100 milhões de passageiros por ano. “Com o desinvestimento do governo na rede, os trens de passageiros foram perdendo competitividade e começaram a ser desativados e foram substituídos pelo transporte de rodovias. Agora devemos ter novo momento de retomada do setor”, considera.

Hoje, apenas duas linhas férreas recebem transporte de passageiros no país: a Estrada de Ferro Carajás, entre São Luís-Carajás (PA), e a Estrada de Ferro Vitória-Minas entre Vitória e Belo Horizonte. Ambas são mantidas em projetos sociais da Vale e movimentam juntas 1,5 milhão de passageiros por ano.

Good fodder for a private Wiki on the subject.

Truth Commission SP | Who the Hell Was Halliwell?

I read it in the Estadão.

Ongoing work by federal and state truth commissions related to the military dictatorship of 1964-1985 has turned up the log entries of persons entering and exiting the notorious torture facilities of São Paulo — among them a U.S. diplomat who was a frequent visitor.

U.S. citizen  Claris Halliwell, identified as a regular visitor to S. Paulo’s Department of Social and Political Order — DOPS — during the military dictatorship, was a diplomat working out of the São Paulo consulate as a political attaché.

According to a telegram dispatched in 1973 by the U.S. Embassy to the Department of State, he began to receive threats because of his activities.

The name Halliwell came to light after  a series of  log books or sign-in registers were found in the archives of the defunct department — one of the most significant centers of political repression in Brazil during the 1970s.

A state-sponsored study of these records showed Halliwell spending time at the DOPS building between April 1971 and November 1973. Identifying himself as a “consul,” in 1971 he visited the site twice a month, on average, meeting directly with frontline agents of the political repression, many of them accused of torturing political prisoners.

Contacted for comment by the Estado, representatives of the Consulate São Paulo said they could not confirm Halliwell’s stay in São Paulo because they did not keep records from that far back in time. They might be found, however, in the U.S. National Archive.

But it will not be easy. A preliminary search turns up only a declassified exchange of messages between Brazil and State, detailing the threatening calls targeting Halliwell.

THERE IS A POSSIBILITY THAT THIS INCIDENT MAY BE LINKED TO THE FIRE BOMBING INCIDENT AT THE HOME OF CONSUL JAMES W. LAWLER ON MAY 18, 1973, OR TO A SERIES OF HARRASSMENT CALLS RECEIVED IN JUNE

Still, there are a substantial number of results from the 1970s on the keyword “DEOPS.” Download for later reading.

Vi O Mundo provides more detail — although I think is no correct to call Halliwell a «consul». He was one of those attaché sorts of people. 

CESP | New Kid on the Block?

A tip from the always interesting, if habitually noncommittal, Relatório Reservado:

The [São Paulo] state government is working to consummate the merger of CESP and EMAE. The next step would be to resume the process of privatizing CESP, but there are at least 500 other steps to be taken [before that can happen]..

The Folha de S.Paulo pursues the hint. My translation.

F&A | Ruy Moura’s Breakfast Reading

It has always surprised me that Brazil’s gargantuan and complex business ecosystem   seems unable to produce something along the lines of Dealb%k — an exemplary use of that in-the-moment blog format that keeps readers checking in periodically throughout the day, rather than simply reading it once through and lining the parakeet page with the leftovers.

The business pages of the major Brazilian dailies are heavy on macroeconmic trends, market movements, and the like — stuff you can cover sitting on your ass in front of a Bloomberg Box —  but very light on hard business stories with real protagonists and consequences: Company X overcomes Problem A to accomplish Objective 1.1, or Bank C offers Subsidiary Z to Company Y for X gazillions.

Only the largest economic groups and deals get such coverage, which is not much use to the venture cap, hedge fund or M&A guys who fish a smaller pond — and whose activities are newsworthy themselves, to boot.

So, then, a Brazilian Dealb%k?

The plain old Blogspot Fusões & Aquisições is a step in the right direction, although I  wish it would publish a masthead and take itself seriously as a journalistic source.

Its principal analyst — its only analyst, it seems — appears to be Ruy Moura, founder of Acquisitions Consultora Empresarial Ltda.

Moura’s daily clipping file has climbed to the top of my breakfast reading list, along with the planning ministry’s clipping of various media sources, broken down by topic and searchable.

I think there is a substantial editorial market for the Dealb%k style of coverage.

The only potential competitor I can think of in the Brazilian editorial market is Relatório Reservado, a one-page tip sheet circulating daily to a private circle of subscribers and relying heavily on market rumors.

Exame magazine has a deal flow blog that is useful to check in on as well.

This is the sort of story I find myself missing: 

Water Over the Dam | Will Investors Take the Plunge?

Source: Brasil Econômico | 24 January 2013
Tenor: Market is moderately cautious over energy-sector pricing reform
Excerpt | Translation: C. Brayton

Negative pressure on shares is transitory and reflects the continued uncertainty of investors. The BM&F Bovespa’s electricity and energy sector index (IEE) is down 1%.

The reduction in energy bills announced by the president on January 23 has had a limited negative impact on the shares of electricity generators, transmitters and distributors.

Pedro Galdi,chief analyst at the SLW Corretora brokerage house, explains that the government has already absorbed part of the losses suffered by some companies. 

ANEEL Presents the 20% Solution

ANEEL formally announces its new regulatory regime for energy pricing.

Pundits say that it will prove to be a highly popular policy if it can deliver the promised results. A good part of the coverage of the local press coverage is mind-numbingly negative on those prospects.

See also

• Electricity | Waiting for the Waters of March

On January 24, Brasil Econômico op-eds that alarmist buzz about the risk of rationing is mostly baseless.  But let us return to that later. The ANEEL anouncement from Friday:

During an extraordinary session held January 24, ANEEL approved new electricity pricing tables that will reduce the cost of electrical energy to users.  The average savings to the end user will be 20.2%. Residential users will see their electricity bills reduced by at least 18% (see table, below). For industrial users of high tension lines, the discount will approach 32%. The new price structure is in effect as of today, January 25.

The reductions are the result of Law No. 12,783/2013 — it provides for the immediate renewal and renegotiation of transmission and generation concessions expiring in 2017 — as well as Provisional Measures 591/2012 and Decree 605/2013.

The two executive mandates create a special tax allocated to a reserve account — the Energy Development Account  (CDE) –

created by Law 10,438/2002 with the objective of developing energy in the states and improving the competitive capacity of various alternative forms of energy, as well as to universalize the provision of electrical energy in Brazil.

The funds managed by the CDE flow from the annual payments by concessionaires for the use of public property, as well as fines assessed by ANEEL. Since 2003, the quota is paid by all energy resellers doing business with the end user. In other words, part of the  CDE comes out of the taxpayer’s poakets.

The idea is that the refusal of most of the largest electricity generators and transmitters to take part in the plan is to be offset with funds from the CDE.

MP 605/2013 assigns the  CDE two additional tasks. One is to compensate for discounts in usage rights to the distribution system and in cost to the end user. The other is to compensate for the refusal of some energy generation concessionaires to accept the deferral proposed in the Law of the Energy Sector in exchange for price reductions. 

In a workmanlike overview of the situation, Globo noted:

In December 2012, Mines and Energy secretary Márcio Zimmermann went so far as to state that it would be imipossible to reduce rates as deeply as initially announced due to the refusal of certain energy companies to embrace the deal.

The Sign of Four

 

The terms of the deal were refused by Cesp (São Paulo), Cemig (Minas Gerais), Copel (Paraná) and Celg (Goiás). All four are state-owned firms in states governed by the  opposition PSDB.

“It is surprising to see, last month, how many persons were … sustaining baseless disinformation over the level of our hyrdoelectric reserves and the entrely normal activation of the thermoelectric plants. As you would expect, these predictions failed to pan out. Brazil has not failed to produce a single kilowatt that it needed, and now, during the rainy season, the thermo plants will no longer have to bear the load,” said President Dilma.

 

The principal changes that will allow lower prices were:

1. Reallocating the energy quotas of generators that renew  concessions early, at an average price of R$ 32.81 MWh.
2. Reduction of transmission costs.
3. Reduction of the sector’s tax burden.
4. Removal of subsidies from the price table, with direct support of the federal treasury

Reductions and adjustments

The effect of this reduction is structural in nature. That is to say, it will promote a permanent change in the price structure of the industry, in that it will permanently do away with figuring costs into the pricing tables in the past.

Different Rates. ANEEL will establish a different rate structure for every energy distributor, based on the specific characteristics of each.  Lower energy prices should guarantee quality energy supply; it should also ensure that service providers receive sufficient revenues to cover their costs and to invest in the maintenance and expansion of the energy sytem.

Meet Your Meter Reader

Because meters are read at times that vary from one distributor to another, the full effect on the consumer’s monthly bill will not manifest itself until the first full billing cycle after the new price structures are implemented.

That is to say, during the first month under the new pricing scheme, depending on the expiration date of the previous contract, part of the user base will be billed under the old scheme and another part under the new,

With the new price table taking effect on January 24, for example, a customer whose bill is dated February  10 be billed half of the old price and half of the new. As of February 25, all users will see the benefits reflected in their bills.

Types of consumer. Other factors may lead to changes in energy prices, such as the terms of energy supply contracts. “Captive” residential and low-income consumers — those with no choice in the selection of a distributor — will all pay the single price negotiated by the concessionaire.

Variations in prices will also occur based on the level of tension provided to the end user, defined as the tension available in the distribution system, varying from 110V to more than 2,300 volts This variation divides consumers into two groups: Group A (≥ 2,300 volts) and Group B (≤ 2,300 volts). Group B comprises residential or low-income customers, among others.

Group A consumers pay predefined prices for energy and for peak and off-peak usage of the network. “Free market” consumers have different characteristics, in that they can trade for energy with other suppliers, under special conditions.

Learn more. ANEEL  has published a a number of documents and content on its Web that explain how your energy bill is calculated, how the concessional renewals and price reviews work, as well as tips on the most economical way to use electricity.

The table below shows the savings to customers of the various low-tension service providers.

AES SUL	23,62%
AMAZONAS	18,22%
AMPLA	18,00%
BANDEIRANTE	18,08%
BOA VISTA	18,14%
CAIUA	18,08%
CEA	18,04%
CEAL	18,00%
CEB	18,11%
CEEE	18,13%
CELESC	18,48%
CELG	18,00%
CELPA	18,83%
CELPE	18,04%
CELTINS	18,20%
CEMAR	18,00%
CEMAT	19,29%
CEMIG	18,14%
CEPISA	18,00%
CERON	18,00%
CERR	18,04%
CFLM	20,92%
CFLO	18,00%
CHESP	18,01%
CJE	18,34%
CLFSC	19,66%
CNEE	19,69%
COCEL	18,41%
COELBA	18,96%
COELCE	18,05%
COOPERALIANÇA	18,01%
COPEL	18,12%
COSERN	18,00%
CPEE	23,38%
CPFL PAULISTA	18,07%
CPFL PIRATININGA	18,39%
CSPE	18,01%
DEMEI	18,36%
DMED	18,08%
EBO	18,00%
EDEVP	18,16%
EEB	18,65%
EFLUL	18,17%
ELEKTRO	18,47%
ELETROACRE	18,01%
ELETROCAR	18,07%
ELETROPAULO	18,25%
ELFJC	18,04%
ELFSM	18,97%
EMG	18,14%
ENERSUL	18,24%
ENF	18,07%
EPB	18,01%
ESCELSA	18,01%
ESE	18,00%
FORCEL	18,01%
HIDROPAN	18,50%
IGUACU	18,11%
LIGHT	18,10%
MUXFELDT	18,55%
RGE	22,00%
SULGIPE	18,33%
UHENPAL	25,94%

Electricity | Waiting for the Waters of March

As the date draws near for the early renegotiation of generation, transmission and distribution concessions in the Brazilian electrical sector,  Jornal da Energia suggests that major players — including the state-owned Copel and Cesp and the privately owned Tractebel — will fare better in the stock markets than will companies that agreed to the renegotiation.

I cannot offer an authoritative translation of the article because I am still trying to catch up on my investor education regarding the ins, outs and bureaucratic tesseracts of the industry.

It does seem plausible that the state-owned companies refusing early renegotiation, the aim of which is to reduce electricity retail prices by 20%, represent political alliances acting in concert.

Copel, Cesp, and Cemig are all owned and operated governments of the opposition PSDB party. Their combined market share — my half-assed pie chart, above — represents a near-perfect counterweight to the federal Eletrobras.

Cemig is not, however, included in the list of higher performing concessionaires, and has demonstrated systematic seasonal volatility over the past 5 years — above, the company’s ADRs.

«Vivendi Sells Off GVT»

Source:  Portal ClippingMP.

BTG Pactual, the investment bank led by André Esteves, has dropped out of the running for Brazilian telephone company GVT, controlled since 2009 by the French communications and entertainment groupo Vivendi.

At the outset, the company was pursued by four suitors, but that number fell to three when BTG, due to a combination of factors, including … price, as Valor discovered. BTG has no comment on the story. It is believed that Esteves could rethink the company’s offer and rejoin the fray.

The sale of GVT is in its “data room” phase, opening its books to interested parties. Binding offers are expected in February, but in the meantime, the company’s data has undergone constant, though minor, adjustments.

The three groups still in the running are (1) the consortium comprising the American fund KKR, the Brazilian asset manager Gávea —  founded by former Brazilian central bank chairman Armínio Fraga — and Cambuhy Investimentos; (2) Apax, a Brazilian private equity partnership; and (3) the American DirecTV.

GVT has been valued at some R$16 billion. When it decided to sell off its Brazilian holdings, Vivendi decided to offer  between €7 billion e €9 billion for GVT. As soon as bidding began, Vivendi showed signs of a willingness to accept R$19 bilhões, or €6.3 billion.

In 2009, a Vivendi invested R$ 7.5 billion in the purchase of 100% of GVT after disputing the deal with Telefónica.

The value of  GVT as estimated by the interested parties places it above its competitor, Oi, with its R$15 billion in market capital. The Telefonica-Vivo group has a market value of R$55.7 on the São Paulo Stock Exchange | Bovespa.

I wish it were easier to call up share price data from the Web site of the BMF-Bovespa.

Brazilian blog Fusões e Acquisições has been tracking the deal since June of last year.

Vivendi began to consider divesting itself of  GVT after a failed attempt to sell off Activision Blizzard, its digital gaming unit. Sources say, however, that the company was not willing to pay the offer price. “Selling off GVT is no longer a taboo subject and is being discussed internally,”said one source. But Vivendi has not yet hired an investment bank to sell the company off.

Vivendi, a conglomerate whose holdings range from telecom to entertainment, is reviewing its internal structure in order to shore up its falling share price.  Investment banks have submitted investment plans that provide for the sale of business units or the complete dismembering of the Vivendi group.

Valued at  [?]20.5 billion, Vivendi is led by board chairman Jean-René Fourtou, 72, who took over after former CEO Jean-Bernard Levy announced he was leaving last month, citing a falling out among board members over how best to restructure the group.

Vivendi’s share price has recovered somewhat in the meantime, from €13.63 to €17.

Brazil | «IPOs to Quintuple in 2013»

Source: Portal ClippingMP « Valor Econômico
By: Talita Moreira and Ana Paula Ragazzi
Translation: C. Brayton

S. PAULO — After a lean year for initial public offerings, with a mere R$ 4.3 billion in play — the lowest amount since 2005 — major corporations will likely reconsider floating, or refloating, shares on the stock market this year.

Is that a lot or a little? In tech IPOs alone, the Nasdaq led the NYSE-Euronext 17 to 15 this year — I am reading from a press release. In 2004, 69 domestic companies and 11 qualified closed-end funds went public on the NYSE, for a total volume of 80 IPOs and $45 billion. Should ADRs not be counted as well?