The Dreamliner and the Brazilian F/A-18

C-390F_Correios_01

Source:  Radar On-line (Veja magazine)

The Planalto Palace has two serious concerns with news of U.S. spying. First and most obviously, the presidential palace wants to know how close the U.S. spy agency got to the offices of the President and her ministers.

Another priority is to learn the extent of industrial espionage. A major risk, according to palace sources, is the potential violation of confidential information shared during the negotiations over the purchase of fighter jets for the Brazilian air force.

Not coincidentally,  Brasil continues to evaluate three models of fighter: French, Swedish and American.

The American entry is the Boeing F/A-18.

In its most recent “yellow pages” interview, Veja features Boeing’s Jim McNerny evaluating the opportunities present in the Brazilian market, an interview conducted at the Boeing offices in D.C.

Boeing and Brazil’s Embraer signed a memorandum of understanding on June 26 to jointly market Embraer’s medium airlifter, the KC-390 — above.

Veja’s softball interview — a specialty of the house — touches only briefly on the fighter order, but does focus, sympathetically,  on the woes suffered by the Boeing 787a story covered on July 15 by Veja’s business-themed sister publication Exame.

The exec says that all the lithium ion battery problems have now been resolved.

A July 15 story in Exame, however, suggests that the headache persists:

Boeing faces a revealing public test of the carbon-fiber technology used in its 787 Dreamliner after a fire broke out on one of its aircraft at Heathrow Airport, in London.

British investigators say that the lithium ion batteries on the Ethiopian Airlines aircraft probably did not cause the fire, alleviating concerns about the return of the problem that led to the cancellation of Dreamliner flights for more than three months earlier this year, when a battery caught fire and another overheated.

Wall Street and passengers so far seem unconcerned: Boeing shares are expected to stabilize on Monday [July 15] after falling 4.7% on Friday. The airlines are keeping their aircraft flying and passengers in Japan, the jet’s primary market, are not cancelling flights.

Japan is said to be refusing to declare the aircraft flightworthy, regarding which McNerney says,

Safety is critically important to the Japanese, as it is to us. In Japan, there is zero tolerance for safety issues. They are asking for evidence that nothing else is wrong. We will provide the evidence. The situation is totally normal. We have sold 59 aircraft to ten airlines, none of them, so far, Brazilian. But an Ethiopian Airlines  787 is beginning to land in Brazil, in São Paulo and Rio. By year end we will have delivered 110 aircraft.

According to a July 2 story in the Telegraph,

JAL and its rival All Nippon Airways (ANA) both blamed the grounding of their Dreamliner fleets for hitting revenues to the tune of $200m, prompting Boeing to print full-page apologies in major Japanese newspapers. Japan is the single-biggest market for Boeing’s newest aircraft.

Veja closes its yellow pages interview by asking in general terms about what it was like to run a company in a country where corruption is rife — a question the executive deftly avoided, saying, “I would not say that Brazil is dramatically worse” than other countries in this area.

The exec also makes a point of promising that the fighter sale would include the technology transfer demanded by the Brazilians.

The interview bears all the earmarks of a charm offensive — as in the subtitle in which McNerney is quoted as saying, “My response [to news of aviation disasters] is the same as anyone’s. Human tragedy is human tragedy.”

The yellow pages are known for their publicity-driven, hagiographical profiles, and this seems like no exception to the rule. Consider the following ridiculous softball exchange:

Q: Is the 787 an enormous innovation?

A: Without a doubt. It is what the 707 was in its day [launched in 1958, it was the first Boeing commercial jet and the first in its class to achieve commercial success.] The 787 offers airlines improved performance and fuel efficiency, less environmental damage and lower costs. It is a productivity tool.

Q: What are the advantages for passengers?

This follow-on  question lacks a “disadvantages” follow-up.

Exame again, however:

The question is, can the aircraft that caught fire be repaired easily at a reasonable cost? These specific repairs have never been conducted on a operation commercial airliner. That makes the Ethiopian Airline incident the first opportunity for airlines, financiers, and competitors to study a real-life example of how to repair the plane and and how much it will cost.

Diagnosis: a mild case of «autohagiography by proxy» — self-praise and self-defense in a quasi-journalistic genre.

Coverage | Rating Port Reports

Porto de Santos - Fotografias antigas

Via Observatório da Imprensa

By: Rolf Kuntz

Translate: C. Brayton

The Brazilian government is busy trying to stimulate the modernization of and competition among the ports, the stated goals of Provisional Measure 595, approved by a final vote in Congress on May 16.

Brazilian ports are among the best in the world at processing iron ore but occupy 35th place in the handling of containers, according to a study executed by FIRJAN and reproduced in the May 19 edition of O Globo.

To stimulate competition, however, it will be necesary to multiply access routes to various terminals, the Estado de S. Paulo warned in an article published the same day.

The contrast between coverage by the Folha and O Globo is striking: the Folha refers insistently to the current “chaos” as O Globo looks forward to an advance in the rankings, as follows.

Brazilian ports are experiencing a paradox. In port terminals for the export of iron, Brazil leads the world rankings in first, second and fifth place. Among ports that handle containers, it falls to 35th place, bringing up the rear in a study released by FIRJAN, the Rio de Janeiro industrial federation. Investments in increased capacity, modernization of equipment and improvements in electronic cargo handling could elevate Brazil to 17th place within three years. This leap, according to experts, could be favored by the MP dos Portos, approved last week in Congress.

Returning to the Estado analysis and its prognosis of “chaos”:

“The lack of alternative routes ends up overloading the southern and southeastern coastal ports, while other ports are practically idle.  In the area of grains, nearly two-thirds of production for export leaves the country through Santos (SP) and Paranaguá (PR). The rest is divided among 16 terminals scattered along the coast,” the article said.

With these articles, the two newspapers enriched the reader’s understanding one of the hottest and complex issues of the week, the vote on the Provisional Measure of the Ports. The major news organizations made a mighty effort over the course of that week to follow the voting in the two houses of Congress. Moreover, they took the trouble to explain the issue in detail and demonstrate to readers how important it was.

Hard Work

There were long, hard negotiations in the lower house. The government had failed to mobilize its congressional base of support. For this reason, a last-minute push was needed to obtain votes for the measure without agreeing to disastrous amendments.  MP 595 was to lose its validity at midnight on May 16.

An MP is a bill sent down by the executive to be voted by the Congress, with a time constraint. The mechanism is often criticized as an incursion of executive power into the powers of Congress.

With some of its main allies working against the bill, the government had to make concessions and promise resources for projects financed by budget amendments.

According to journalistic accounts, the Treasury is to release R$ 1 billion, and more political appointments are to be made. Debates in Câmara went on well into the night and the decisive session lasted 22 hours. Lawmakers were photographed sleeping on the floor of Congress, but sleep is a luxury reporters do not enjoy.

Observing this marathon was only part of the mission. Day by day it was necessary to explain the principal changes proposed, their consequences, and the probable reaction of the government.  It may be argued whether the effort was consistently successful, but the performance of the media was undeniable. It would be very difficult to obtain, in these conditions, a better result.  On May 17, the major dailies were still fixated on final approval of the bill, obtained quickly and with surprising facility by the Senate. The effort to translate the details of the text for the lay reader and to indicate the likely presidential vetos continued on Saturday.

Complex Agenda

On Sundary, the newspapers made space on the front page again for the topic.  “Brazil may advance in global ranking,” informed O Globo, with a jump head for an article on the classification and future of the ports. “New ports will require new roads and railroads,”, was the top headline of the Estadão. In a more discrete reference to the story, at the foot of the front page, the Folha de S. Paulo registered the statement: “‘I am not an evil genius’, said Eduardo Cunha, an opponent of the MP dos Portos”. Cunha leads the PMDB in the lower house of congress, the part of vice-president Michel Temer and the government’s most powerful ally. Its resistance was the principal obstacle to the approval of the measure.

Given the prospect that certain articles may be vetoed, there is much new material that will have to be explored and explained in subsequent editions. To date, the MP dos Portos is the most complete and best-organized governmental initiative to increase efficiency and competitiveness of the Brazilian economy.  But it is merely one part of a much broader agenda, as exemplified by the Estado’s story on the condition of access roads connecting to the terminals.

Odebrecht | Risks and Riches

Maracanã undergoes reconstruction

Maracanã undergoes reconstruction

2013 has so far been a time of trials for the Brazillionaire, a caste that has benefited significantly in recent years from the Lula government’s ambition to breed and incubate Brazilian multinationals with acquisitive power — think of JBS-Friboi’s takeover of the venerable Swift & Co.

The most visible sign of decline has been the performance of companies in the Eike Batista group, whose OGX petroleum subsidiary leads losses recently in the BM&FBovespa and is reportedly seeking outside and foreign investment.

Via Brasil 24/7.

With close ties to PT, Odebrecht carries $R 62 billion in debt

The Odebrecht group, which operates in the petrochemical and biofuels markets, produces nuclear submarines, participates in the management of the Maracanã football stadium and is one of the companies benefiting most from the amended Port Law, has run up debts equivalent to 3.5 times its net assets of R$ 17 billion.

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ANEEL Presents the 20% Solution

eletropie

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

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%

«Vivendi Sells Off GVT»

gvt-logo

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?

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Scandal 47 | Dilma Delegates

I read it in the Estadão, and translate.

BRASÍLIA – President Dilma Rousseff has decided to fire the head of the Federal Presidency’s office in São Paulo, Rosemary Nóvoa de Noronha, who has been indicted by federal police for corruption and influence peddling. The second highest ranking official in the federal Attorney General’s office will also be let go.

The case apparently involves a Paraguayan over-the-counter market in favorable regulatory findings, such as those required to get cargo into the country via Santos, one of its principal ports.

Remind me to tell that well-worn story of mine about getting my books into the country using a Santos despachante.

In the meantime, this item from the white-collar police blotter sounds a lot like a familiar broken record — petty-ante crimes by permanent civil servants of the State used to leverage accusations of endemic corruption inside the Government. Continue reading

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