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High Tension in Low-Lying Places | NIMBY in the Alto de Pinheiros

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I suppose I have lived here in Sambodia long enough now to be drawn in to local NIMBYism — «not in my backyard» lobbying in defense of narrow interests.

Hell, taking a gander at our IPTU — property taxes, basically — is turning me into someone with a valid opinion on the subject.

A case in point, featured on Page C1 of the Folha de S. Paulo today:

Source: Folha de S.Paulo
Translation: C. Brayton

The legal battle between residents of the Alto de Pinheiros neighborhood — Western Zone — and electricity supplier AES Eletropaulo over the network of high-tension wires that crosses the neighborhood has arrived at the federal supreme court, the STF.

  • System is totally safe, company says
  • Electricity grid should be buried, says local resident
  • Cell phone antennas also the target of lawsuits.

The STF will hold a three-day public hearing in March to discuss whether high-tension towers lead to health problems, such as cancer.

Residents are paying international specialists to defend their position in Brasília.

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Brazilian Electricity Wars | The R$ 5 Billion Feud

wikielecbr

Surprisingly informative:

eletropie

The history lesson is especially useful, as are the league tables — which may need touching up, however. The Brazilian government has set up a useful informational page on the New Model for the Electricity Sector, passed in 2004. Three of the largest state-owned — as opposed to federally-owned — generation groups are refusing to play ball.

IstoÉ Dinheiro magazine leads with a mocking headline:

Honey, I Shrank CESP

São Paulo electricity concessionaire will lose nearly 80% of its revenues by 2015. Learn how other companies who refused the federal plan to reduce electricity bills are faring.

After a period of intense political gamesmanship, scores of Excel spreadsheets and a sharp decline in their share prices — an estimated R$19.2 billion — Cesp, Cemig e Copel decided last week not to accept the federal goverment’s new rules for the electricity sector.

The three companies represent 60% of the generation capacity in play as part of Dilma Rousseff’s plan to reduce energy prices by 20% in 2013.

The most emblematic of these is Cesp, whose directors are overseen by governor Geraldo Alckmin of the opposition PSDB. In saying no to the proposal, the state-owned CESP will lose 77.8% of its revenues starting in 2015. Based on data from 2011, this implies a loss of R$ 2.3 billion in cash reserves, currently at R$ 3 billion.

[Caption] Alckmin: Govenor prefers to reduce the size of CESP rather than reduce the lighting bill of São Paulo residents.

“CESP will become a minor company,” says Ricardo Corrêa of the Ativa Corretora brokerage firm.

In Minas Gerais and Paranhá, respectively, Cemig and Copel have renewed their transmission concessions but plan to give up a number of generation plants, and so will suffer the same effects in 2015.

The three companies have three PSDB state governments as majority shareholders: the Alckmin government, in São Paulo, along with Antonio Anastasia in Minas Gerais and Beto Richa in Paraná. In turning down the concession renewals, these state-owned firms may make it impossible for Dilma Rousseff to keep her promise to reduce the average energy bill by 20,2% starting in March 2013.

Leaving out Cesp, Cemig and Copel, the guaranteed savings would be just 16.2%, according to data from the ministry of mines and energy.

We will take it, for now, and thank you very much.

The president, however, seems firm in her desire to provide cheaper electricity. “Reducing the price of energy is a decision from which the government will not back down, although it laments the lack of sensitivity on the part of those who fail to recognize the importance of this step for the sustainable growth of our economy,”Dilma told a group of business executives in Brasilia on Wednesday.

To realize its target, the government has a tax gambit up its sleeve, market analysts say.

“All it takes is a reduction of the PIS/Cofins tax on the energy bill,” says Nivalde de Castro, coordinator of the energy studies group at UFRJ.

Amid an exchange of accusations with the federal government, São Paulo says that the CESP decision was entirely technical.

Proof of this, according to state energy secretary José Aníbal, is that another of São Paulo’s state-owned firms, EMAE, accepted the federal government’s conditions and signed the contract. In the case of Cesp, the difference between the indemnity for unamortized investments offered by the feds and the sum judged correct by the state is R$ 5.4 billion.

Márcio Zimmermann, federal executive secretary for mines and energy, says: “We cannot understand the logic that led this company not to renew its concessions.” But CESP accepted lower energy prices, according to Anibal, it would have difficulty honoring existing energy contracts, worth R$130 Mw/h on average. “They suggested we buy this energy on the free market, but the price there is R$ 200 Mw/h,” Anibal said. “I challenge the federal government to show us their calculation. The situation of Cemig and Copel and very different from that of CESP. On Wednesday, Djalma de Morais, CEO of Cemig, took part in an analyst conference call and said that eventual losses, and especially those in the area of transmission, will be compensated with internal adjustments.

“Our plan provides for a 20% reduction of operating expenses in this segment, as a method of controlling costs,” Morais said. The CESP executive announced that the company will maintain its investment plan and, if necessary, will go to court to guarantee the right to renew concessions under the old rules, which apply to 3 of its 21 generation plants.

In the Senate, Aécio Neves (PSDB-MG) gave a speech in which he accused the presidency of “committing a foolish act in tryiing to reduce the price at the cost of bankrupting the sector.”

Currently, generation is responsible for 40% of Cemig revenues. Transmission accounts for another 20%. The rest is accounted for under “other businesses,” which include supplying natural gas to residences and industry.

“In the future, gas may also be used to generate electricity,” says Luiz Fernando Rolla, Cemig COO, who does not rule out the acquisition or construction of new plants.

Copel is already traveling down that path. By year’s end, the Mauá and Cavernoso 2 generating plants, with joint capacity of 380 MW, will begin operations. That is more than the 272 MW in capacity that Copel did not renew. Like Cemig, Copel adhered to the federal program only with respect to its transmission assets. In this case, the company took a hard blow. “Our revenues in this area are down 58%,” the company said in a note to investors.

Though they did not release their spreadsheets, Mines and Energy and ANEEL affirmed that the sums offered are more than sufficient to guarantee the profitability of the generation sector. “We do not understand the logic behind the refusal of these companies to renegotiate and renew,” said Márcio Zimmermann

Eletrobras, controlled by the federal government, adhered in full to the new rules, reasoning that a state-owned firm must take into account not only its balance sheet but is social role as well. Eletrobras intends to compensate for reduced income with cost-control measures.

“We will review our expenses and investments in the short, middle and long term,” said José da Costa, CEO Eletrobras. Investors did not like this news and Eletrobras shares plummeted 50%, costing it R$ 11.6 billion in market cap. Cesp, meanwhile, by not renewing its concessions, has laid to rest a persistent dream of the PSDB: to privatize the company.

“Not viable,” said Aníbal. “Who would want to buy a company with two concessions expiring in the next two and a half years?” The only other asset in the company’s portfolio is a large hydroelectric plant in Porto Primavera, whose concession expires in 2028. If it wants to rebuild its profile, CESP will have to compete in future auctions, a possibility no discarded by the S. Paulo state government.

Taking Out A Contract | Waterfall’s São Paulo Dealings

The oppositionist Diário de Manhã  warns Brazilian federal deputies in the government alliance that an investigation of crooked contracting practices in the «Waterfall» case might also hurt the ruling PT and the allied PMDB.

Recently read:

Leandro Fortes, “Cachoeira leaves fingerprints on São Paulo,” Carta Capital(Brazil), 19 September 2012.

I translate a passage or two.

 Technical experts working for the federal parliamentary inquiry into mob boss and lobbyist Carlinhos Cachoeira have just finished a complete survey of all contracts signed by the São Paulo state and municipal governments and Delta, a private contractor linked to the criminal organization headed by the numbers racketeer.

Linked how? That’s the interesting question. Leandro Fortes calls him a “silent partner” of and lobbyist for the engineering firm, one of the largest in Brazil.

In an intriguing sidelight, the scheme apparently used journalists, both witting and unwitting, to smear, with screaming headlines, rivals and government officials standing in the way of its interests . Fortes cites past negotiations over a report that ran in Globo’s Época magazine, for example:

The revelation of a relationship between Globo and its magazine and the group headed by the numbers boss comes just as Leonardo Gagno, the attorney for Cachoeira right-hand man and black bag operator Dadá, told the congressional commission that Dadá and his colleague were tasked with “feeding stories to the news media,” and that “Cachoeira’s interest in using [information warfare] as a part of doing business was well-known by everyone.”

«informações» = information, intelligence, counterintelligence

But back to CartaCapital and Leandro.

The alleged scheme involves sums in excess of R$ 1.2 billion. The results of the study reveal the relationship of PSDB governments with the parent organization of the Cachoeira conspiracy and cast suspicion on seven-figure contracts negotiated by the Kassab municipal government in São Paulo, supposedly influenced by the former DEM senator for Goias, Demóstenes Torres.

Kassab was a member of the DEM until a year or so ago when he jumped ship to the newly founded PSD.

Delta received the contract for the urban renewal of the Paraisópolis shantytown under the Kassab government.

The project is being used as a model urban renewal project in TV inserts for mayoral candidate José Serra.

The indefatigable Paulo Preto puts in an appearance as well. A federal police telephone wiretap conducted during Operation Monte Carlo captured a conversation between Cachoeira and Cláudio Abreu, Delta’s regional director for the Brazilian Center-West, in which th two men discuss Delta’s contracts with the São Paulo city government.

Dated January 31, 2012, the wiretap captures the numbers and bingo boss asking Abreu about a conversation between Delta’s former CEO, Fernando Cavendish and Mayor Kassab about an as yet unidentified contract.

The Delta director makes a revelation: As a favor to Senator Torres, São Paulo’s mayor supposedly tripled the value of the unidentified contract. The converation runs as follows, transcribed from an audio file to which CartaCapital had access:

— Carlinhos Cachoeira: One other thing, Cláudio, Did you speak to Fernando (Cavendish) about that thing with Kassab?

— Cláudio Abreu: … I am going to meet with him later, I am going over there to give him an answer. But tell me, what’s the deal over there? The contract, right? He did the thing, didn’t he? He did it for the Professor (Demóstenes Torres), right?

— Cachoeira: He (Kassab) said he tripled the contract for him (Demóstenes).

An analysis conducted by the CPI indicates that São Paulo city hall signed three contracts with Delta between 2004 and 2012, worth a total of 307.6 million.

A contract with the Companhia de Limpeza Urbana (Comlurb) – street sweeping and garbage collection — was worth R$ 93.7 million. A contract for the urban renewal of the Paraisópolis shantytown, signed with the city housing authority, was worth R$ 15.4 million. A contract with São Paulo Transporte S.A. (SPTrans) — public transportation — was worth R$ 12.2 million.

Given the timeframe of the police surveillance, it is not yet possible to detect exactly which of the contracts was allegedly tripled, since all three were continued into 2012.

City hall spokesman Emerson Figueiredo said that Mayor Kassab “is unaware of this dialogue and its supposed protagonists and considers its content groundless.”

Relations between Delta and the São Paulo state government involve larger sums, totaling R$ 943 million in today’s reais. The contracts were signed under state governors José Serra (R$ 765 million) and Geraldo Alckmin (R$ 178 million) between 2002 and 2012. The deals were signed at the instance of five state-owned firms: Dersa and DER (highways), Daee (hydroelectric power), Sabesp (water and sewage treatment), and Unicamp (state university).

The most significant project for which the state contracted Delta was as part of the New Tiete Consortium, which undertook to broaden the Tiete beltway for R$ 150 million. The contract ran from June 22, 2009 to April 10, 2012. Based on an analysis of the transfer of consortium funds to Delta’s accounts, the CPI’s technicians concluded that the companies involved have no controls over the allocation of credits and debits to consortium members. In this way, one firm may subcontract another and pay it the entire amount due for the service. Using this subterfuge, and based on the padding of invoices or  falsification of receipts for services rendered, the difference can be returned to the subcontractor with absolutely no oversight or disclosure.

Delta may have mounted a money laundering scheme using such bureaucratic subterfuges. The experts also noted that Delta’s subcontractors enter into contracts with one another … and transfer funds to one another without accounting for the sums transferred.

The congressional inquiry into São Paulo public works contracts coincides with the results of an earlier survey by Conceição Lemes, of the Web log Viomundo, based on data from the Transparência São Paulo Web log, which specializes in the analyis of public spending.

Based on this information, it was possible to detect that the contract with Dersa with respect to the Tiete project (R$ 415 million) was signed by Paulo Vieira de Souza, aka «Paulo Preto», Dersa’s director of engineering until April 2010, and by Dersa CEO and superintendent Delson Amador.

With intimate ties to the PSDB — social democrats — «Black Paulo» was reputedly a fundraiser for party election campaigns and at one point was accused of making off with R$ 4 million supposedly earmarked for the Serra for President campaign.

Black Paulo and Amador also figure in the federal police Operation Sandcastle in which executives of public works contractor Camargo Corrêa were accused of mounting a bribery scheme in public works projects.

In 1997, when Andrea Matarazzo of the PSDB presided over the company, Delson Amador was named CEO of the state-owned electric company (Cesp),which was later privatized.

He was responsible for auditing public works projects involving Camargo Corrêa, such as the Porto Primavera generation plant and the Ponte Pauliceia, a bridge over the Paraná River linking Pauliceia, São Paulo and Brasilândia, Mato Grosso do Sul. Amador was Matarazzo’s chief of staff when Matarazzo headed the Sé subprefecture in metro São Paulo.

A certificate issued by the São Paulo Junta Comercial – the corporations registry – indicates that Heraldo Puccini Neto, Delta’s regional director for São Paulo and the Brazilian South, is also the legal representative of the Nova Tietê consortium.

Federal police wiretaps show that Puccini is one of the closest confidants of Carlinhos Cachoeira. Documents from federal police Operation Monte Carlo point to to Puccini as one of the persons used by the scheme to prepare bids for public works projects.

«Is There a Housing Bubble in Brazil?»

Source: Folhapress, via Brasilianas.Org. I translate …

Is there a housing bubble in Brazil? Five indicators for and against

Pro

  1. Housing prices have risen far beyond inflation and the purchasing power of families
  2. The volume of available housing credit jumped from 1.5% of GDP in 2007 to 5.5% in 2012
  3. Interest rates have fallen substantially and homes are financed at favorable interest rates
  4. Purchase prices have risen faster than rents
  5. Government programs, incentives and public works have overheated the market

Con

  1. The rise of a new middle class and a rosy outlook for the future make the rise in prices sustainable
  2. The volume of housing credit is trivial alongside the 65% of GDP in the United States
  3. Brazilian interest rates remain relatively high, inhibiting the expansion of the real estate sector
  4. Rents may rise, compensating real estate prices
  5. The housing deficit in Brazil remains high: 5 million units

The analysis is by the IPEA, the federal government’s Institute of Applied Economic Research. The IPEA

point to the real possibility of a bubble in the Brazilina real estate market which could explode in the event of future interest hikes.

In other words, the rapid rise in housing prices in recent years is resulting in unrealistic valuations, incompatible with real supply and demand and therefore unsustainable.

The study, by economists Mário Jorge Mendonça and Adolfo Sachsida, brings new arguments to bear on the controversy involving researchers, sellers and buyer.

The economists calculate that prices have risen by 165% in Rio de Janeiro and 132% in São Paulo between January 2008 and February 2012, compared with a 25% inflation rate in the same period.

A rise in prices well beyond the rise in inflation was also observeed in Recife, Belo Horiznote, Brasilian and Fortaleza, though the period studied was smaller because historical data was unavailable.

Price bubbles are generally inflated by rapid growth in the supply of credit.

This type of growth is visible in the Brazilian housing sector — impelled, the study makes it a point to say, by federal government programs, incentives and public works.

“The government’s insistence on heating up what is already an overheated real estate market only contributes to a worse overall result,” the study concludes.

Among the examples cited, along with the availability of favorable interest rates, were the Minha Casa, Minha Vida — My House, My Life — housing program and public works relating to the World Cup 2014 and the 2016 Olympics.

An advisory council of the federal presidency, IPEA does not endorse these conclusions. In its bulletin, the institute argues that the volume of available credit is a long, long way from the 65% of GDP observed in the United States.

We can only speak for our own modest microcosm, here on the modest little street in the Vila Madalena-Sumarezinho where we live: There is a temptation to sell into peak prices which have increased literally six-fold (in theory) in the past decade.

The Center Right Not So Resurgent | Sambodia

From the Diário do Comércio, a daily glocal yellow journalism hot sheet controlled by the São Paulo municipal political machine — now tending toward a breakaway party, the PDS, led by Mayor Kassab — a frank analysis of what the center-right and right needs to do to regain Power — the capitalization is theirs — in 2014.

Recently, a notably concerted campaign by the Brazilian press sought to create moral panic on two fronts: (1) the possible corruption of a senior government minister and (2) the prospect of raging inflation. Neither of the two had a leg to stand on, but were hammered on systematically in an attempt to drive down the popularity of the current federal situation in the polls.

In this analysis, our Machiavellian marimbondo admits  the failure of the strategy — Dilma remains quite popular — and outlines more radical steps to be taken. The essay is titled, more or less — rather less than more, really –“The PSDB at the point of a gun.” Our author: Eymar Mascaro.

The leadership of the Brazilian Social Democratic Party (PSDB) is clamoring for the total support of the 8 governors elected by the party in 2010 in the effort to defeat the federal government of Dilma Roussef.

I cannot tell you why I still use my precious hours of leisure to type out translated notes on Brazil as the Brazilians see it. For some musing along those lines, see my recent Lack of Progress Report. Brasil Weekly is a much better, less quirky, overview of current Sambodian events, for instance.

With the publication of the Datafolha poll, PSDB party president  Sérgio Guerra concluded that the party has to start weakening the PT if it wants a real chance at retaking Power in 2014.

The Datafolha surprised the opposition, which vainly expected the Palocci case to erode the popularity of the government.

This is a “boy who cried wolf” effect, in my reading.

That didn’t happen. Dilma’s approval rating didn’t budge. Despite this outcome, however, the opposition is going to fight to keep the Palocci case alive, expecting Dilma and the PT might still be damaged by the episode.

There simply is no evidence of criminal wrongdoing by the PT minister, whose only fault is that of many politicians: taking advantage of the “revolving door” effect while out of elected office.

The PSDB also decided to amp up its criticisms of the PT, taking advantage of the crisis between the president’s party and the PMDB, who want more posts in the government.

The opposition, however, is in doubt on one point: since the states depend so much on federal funds for public works, the party may not be able to rely on the complete cooperation of its governors.

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Summit of the Syndicates | Labor-Management in Talks On Labor Peace

[youtube http://youtu.be/mlsVqLcvQ6c]

When you live in a Third World country like the U.S.A., you often find that trade unionists have been hunted to extinction, as still occurs in Colombia. The result is that there is no one left to sit around a table, smoke cigarettes, and hash out what all sides can agree on. The result is a new 19th century.

Idaho militias, Oklahoma Cities and Haymarket Massacres.

For that reason it is fascinating to read the headline on page 4 of Valor today that “Fiesp and labor councils to negotiate pro-industrial pact.”

It was not that long ago that the Força Sindicial led the state judicial police on a strike that was put down by rubber bullets to the head at point blank range by the policia militar — above.  No one has ever taught the PM that rubber bullets are supposed to be bounced into peoples’ shins. Every thing you see them out there blasting away, they are aiming for the brain.

The cops don’t need you
and man they expect the same …

With an economy tilted 60-40 toward agribusiness and a historical schism between CUT and Força Sindical on the trade unionist side, there is apprehension that Brazil might not yet escape its traditional role as a commodity exporter and finished goods importer. Ethanol, as a finished good manufactured right in the canavial, has provided an attractive solution, but not all militants for land reform are wild about it.

The Brazilian plan to role out their own first microchip soon, for example — it will be used as a tracker ear-tag for Nelore cattle. And it makes very nice executive and mid-range passenger jets, by Embraer.

Mainly, however, in a year of tight budget restraints, federal resources are tending to go toward alleviating some of the more anachronistic troubles of the campo, agreste and sertão — from claim-jumping and land expropriation by the latifúndio to “working conditions analogous to slavery” and generalized death squad activity.

The Brazilian Northeast has been privileged to receive the lion’s share of social spending under Lula I and Lula II.

According to Valor, Paulo Skaf of Fiesp — a socialist candidate for governor of S. Paulo who recently signed on with the centro-centrist PMDB — will sit down with Arthur Henrique of CUT in talks moderated by Paulinho da Força of the Força Sindical to put together a set of joint recommendations to slow “deindustrialization.”

The project will be known as “the Management-Labor Accord for the Future of Production and Employment.”

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Explosions and Urban Drought | Where Are We, Fallujah?

Diário do Comércio reports: We are not the only neighborhood to suffer from exploding electrical transformers in the greater metro area.

These explosions, which never fail to scare the hell out of me, are regular occurrences during heavy rains, which peak in the summer months of Januray through March.

An AES Eletropaulo tranformer burned out around 5 p.m. yesterday, interupting service at the Baixo Cotia water processing plan, which provides water to some 350,000 reisidents of Itapevi, Jandira and part of Barueri, in the Greater Metropolitan Area.

In a press relese, Sabesp said that since replacing a transformer takes at least 4 hours, cities in the region may go without water. The company recommends rationing of water until service is restored.

Another district will have to wait until October to resolve problems caused by an electrical blackout that hit pumping stations in the area, the DC says.

Resients of the Jardim São Norberto, in the extreme southern district of São Paulo, have had problems with their water service for several weeks now, sincee a blackout took out 46 pumps in seven elevaors. In a press release, Sabesp said the area is in distant region at a high alititude, explaining the difficulty of serving it. Further, the company said, the area is densely populated with many irregular hookups to the water system. Work is planned for October of this year, but until then no solution to the problem is foreseen..

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