BRAZIL: YOUR GATEWAY TO BUSINESS AND INVESTMENT

Investment: Brazil the Hosting Country of World Cup and Olympic Games

Tel-Aviv - December 11, 2011

Giancarlo Gerli Director

COVERED AREAS

INFRASTRUCTURE AND BASIC INDUSTRY

PAPER/PULP TELECOM STEEL MINING

ELECTRIC POWER

WATER AND SANITATION

OIL, GAS AND PETROCHEMICAL

TRANSPORT

INTERRELATED AREAS

INVESTORS SERVICE

OPERATORS OTHER

SERVICES

ENGINEERING ASSEMBLY SYSTEMS /

EQUIPMENTS CONSTRUCTION

GOODS AND SERVICES FOR INFRASTRUCTURE AND BASIC INDUSTRY

321 US$ billion (15% GDP)

KEY FIGURES

2010 REVENUE

144 MEMBERS

372,000 DIRECT JOBS

ACTUAL INFRASTRUCTURE INVESTMENT

13.5 17.0 25.8

31.6 43.2

59.6 61.8

83.3

2003 2004 2005 2006 2007 2008 2009 2010

US$

bill

ion

Exchange rate = annual average dollar.

2003 – 2010 (2010 prices)

56.2 56.1

152.4

53.1

17.9

Transport Electric power Oil and gas Telecommunications Water andsanitation

Exchange rate= annual average dollar.

US$

bill

ion

ACTUAL INFRASTRUCTURE INVESTMENT

2003-2010

INVESTMENT REQUIREMENTS IN INFRASTRUCTURE 2011-2015

ELECTRIC POWER US$ 80.7 b

OIL AND GAS (*) US$ 241.2 b

TRANSPORT/ LOGISTICS US$ 97.7 b

TELECOMMUNICATIONS US$ 56.0 b

WATER AND SANITATION US$ 48.3 b

TOTAL US$ 523.9 b

(*) E&P, downstream, gas and energy.

Exchange rate: 1 US$ = 1.76 R$

OPPORTUNITIES AND PLANS BY SECTOR

GENERATION

Expansion plan will increase the installed capacity (118,400 MW) with additional 45,600 MW (23% renewable).

ELECTRIC POWER

10-YEARS EXPANSION PLAN (2010/2019)

This expansion plan has an integrated vision of the demand expansion

and different available sources.

TRANSMISSION

Physical expansion of the transmission system is expected to happen with additional 36,791 Km

E & P

• After-Salt areas

11th Bid Round – 174 blocks (expected in 2012)

87 off-shore

87 on-shore

• Pre-Salt area – New frontiers

Basins in Santos, Campos and Espirito Santo state

• Shipyard and Systems

Modernization and Expansion of Transpetro (Petrobras subsidiary company) fleet

Demand for building and/or leasing of:

Drilling equipments, production platforms, special and support ships

OIL & GAS

OPPORTUNITIES AND PLANS BY SECTOR

Goal: to recover investment level in infrastructure, addressing 1% of GDP at least, over 2008-2023.

NATIONAL PLAN FOR LOGISTICS AND TRANSPORT

Roadways: conservation and expansion of network

OPPORTUNITIES AND PLANS BY SECTOR

TRANSPORT

restructuring and expansion from 28,830 Km to 44,720 Km (load)

Railways:

Passengers: High Speed Train (São Paulo / Campinas /

Rio e Janeiro): 511 km - Expected investment : US$ 23 B Public hearings planned for February 2012

Ports

NEW PROJECTS PLANNED:

A new plan addressed by the regulatory agency indicates 19 areas along the Brazilian coast where to develop and build new ports.

OPPORTUNITIES AND PLANS BY SECTOR

TRANSPORT

• Private sector is also expected to invest and operate.

• The first project will be set in Manaus (Amazonas State, North Region) involving US$ 795 million.

Airports

Investment plan (2009 to 2014)

• Infraero, federal state-owned company, has released an investment plan for 16 airports with an amount of US$ 5.6 billion. Bidding processes under way or about to happen.

OPPORTUNITIES AND PLANS BY SECTOR

TRANSPORT

Private sector new opportunities

• The federal government started the concession model adoption in the Brazilian airport system. Private utilities will be responsible for investment and operation in a partnership with Infraero. • First airport concession: São Gonçalo do Amarante Airport (city of Natal ) in the State of Rio Grande do Norte (Northeast). Auction done in Aug 22th. • Next airports: Sao Paulo International, Campinas (São Paulo) and Brasília are scheduled to Dec 22th.

WATER AND SANITATION

National Plan for Water and Sanitation:

Federal Government has built a plan (now under final hearings) that aims at universalizing the access to services of water and sanitation in 20 years (2030).

OPPORTUNITIES AND PLANS BY SECTOR

Investment requirements:

• Goal is to provide water and sanitation infrastructure for 100% of the population.

• US$ 9.6 billion/year until 2030 or US$ 11.4 billion/year until 2025.

TELECOMMUNICATIONS

UNIVERSALIZATION OF TELECOMMUNICATION SERVICES

New contracts were signed between regulatory agency and private companies to extent infrastructure and services even to small communities in the country.

Challenge to merge internet, broad band, TV and telephony

OPPORTUNITIES AND PLANS BY SECTOR

Overall Projected Investment (R$ Billion)

Segment 2011 – 2014 Beyond

2014 Total

For a better city (water & sanitation + urban mobility )

57.1 -- 57.1

For the community (healthcare + education)

23.1 -- 23.1

My home, my life (housing) 278.2 -- 278.2

Water and Light for all 30.6 -- 30.6

Transport / Logistics 104.5 4.5 109.0

Energy 465.5 627.1 1092.6

TOTAL 959.0 631.6 1,590.6

PAC II (2011 – 2014)

OPPORTUNITIES AND PLANS BY SECTOR

Source: Federal Government.

INFRASTRUCTURE AREAS

Projected investment (R$ billion)

Segment 2011 – 2014 Beyond

2014 Total

Urban infrastructure (water & sanitation + urban mobility)

57.1 -- 57.1

Water and Light for all 30.6 -- 30.6

Transport and logistics 104.5 4.5 109.0

Energy 465.5 627.1 1,092.6

TOTAL 657.7 631.6 1,289.3

Source: Federal Government.

PAC II (2011 – 2014)

OPPORTUNITIES AND PLANS BY SECTOR

Urban Infrastructure (R$ billion)

W &S: water 13.0

W & S: sewage 20.0

W & S: drainage 10.0

W & S: waste mgmt 1.5

W & S: project development 0.6

Total Water & Sanitation

45.1

Urban mobility (large cities) 12.0

TOTAL 57.1

Source: Federal Government.

PAC II (2011 – 2014)

OPPORTUNITIES AND PLANS BY SECTOR

WORLD CUP 2014

May 13, 2008 – Ministry of Sports and CBF (Brazilian Soccer Confederation) sign a Technical Cooperation Agreement with ABDIB

March 2009 – ABDIB Study concluded : Infrastructure Demand to handle World Cup 2014 in 18 candidate host cities.

Emphasis on structuring projects (multiplying factor)

LEGACY

WORLD CUP 2014

Required Actions

in 9 areas

City Requirements

• Hotel network Able to meet demand

• Public Security

• Touristic and economic potential in the region

• Hospital network (public and private)

•Telecommunications

• Power

• Infrastructure for roads Enabling connections among airport / hotel / stadium

• Infrastructure for airports and ports Allowing transfers of delegations, tourists and supporters in a fast and efficent way

• Water & Sanitation

23

WORLD CUP 2014

GAP ANALYSIS A

B

Actual status

Estimated status in

2014 with existing

projects

Gap still open to

be closed with

recommended

additional projects

Urban Mobility

Hotel network

Power

Telecomm.

Hospital network

Water/ Sanitation

A B

A B

A B

A B

Security

A B

A B

Airports

Ports A B

A B

A B

Key

Ind

icato

rs- M

inim

um

level - 2

014

18

Candidate

cities

Key

Ind

icato

rs - Id

eal le

vel - 2

014

Explanation

Minimum

Level

Ideal

level

Minimum

level of

requirements

to be a host

city for 2014

World Cup

Ideal level to

enable a city

to host any

game in 2014

World Cup,

independently

of the phase

WORLD CUP 2014

Estimated Investment Volume (US$ Million)

Dimension Projects Amount

URBAN MOBILITY 287 39,791.51

16 AIRPORTS 38 4,165.00

PORTS 7 463.71

ELECTRICAL POWER 128 1,566.65

WATER & SANITATION 186 7,313.82

HOTEL NETWORK 132 7,558.41

HOSPITAL NETWORK 25 690.47

SECURITY 63 2,478.79

STADIAS / ARENAS 12 3,836.12

TELECOMMUNICATIONS 30 2,049.53

Total 908 69,914.01

WORLD CUP 2014

Investment Potential by Host-Cities

Host City R$ Million

MANAUS 6,036.95 SALVADOR 8,999.44 FORTALEZA 6,727.20

BRASÍLIA 6,169.50 BELO HORIZONTE 11,681.40

CUIABÁ 2,117.20 RECIFE 5,813.01

CURITIBA 6,830.21 RIO DE JANEIRO 18,675.90

NATAL 5,756.31 PORTO ALEGRE 7,352.20

SÃO PAULO 34,570.80

Total Brazil 120,730.12

Natal

Manaus

Fortaleza

Salvador

Belo Horizonte

Brasília

Cuiabá

São Paulo

Rio de Janeiro

Curitiba

Porto Alegre

Recife

WORLD CUP 2014

WORLD CUP 2014: Arenas and Host cities

WORLD CUP 2014: Arenas and Host cities

Airports INVESTMENT PLAN (2010 - 2014)

Investment Amount (R$ Million)

São Paulo (Viracopos, Guarulhos) 2,139.8

Rio de Janeiro (Galeão, Santos Dumont) 863.7

Belo Horizonte (Confins) 508.6

Porto Alegre 1,208.3

Curitiba 400.8

Brasília 864.6

Cuiabá 90.4

Manaus 327.4

Fortaleza 283.7

Salvador 44.4

Natal 576.9

Recife 19.8

TOTAL AIRPORTS 7,328.4

WORLD CUP 2014

City Project Objectives

Belo Horizonte Investment on the Sewage System for BH Metropolitan

network

Expansion and improvement of the current Sewage

System

Cuiabá Increase in the Sewage Collection Expansion of sewage tunnels

Curitiba Reduction, Disposal and recovery of solid waste Actions aiming at reducing waste generation and

implement adequate disposal

Fortaleza Implementation of the Cocó Macro System (Sewage) Cover 80% population

Natal Implementation of collection network and ocean outfalls

in Nothern region Cover 100% population via sewage network

Porto Alegre New water collection Reduce cost of chemical products for water treatment

Recife/Olinda Capibaribe Basin

Re-urbanization, creation of new public areas and streets

36 boroughs in the western area improvement of

environmental conditions in the Capibaribe basin

Rio de Janeiro Sewage Expansion of the sewage collection and treatment for Rio

Marangá basin, improving coverage.

Salvador

Expansion of the Sewage system - collection, pumping

stations, home connections - Bacias do Comércio, Aratu-

Macaco, Jaguaribi, Calafate 1 e 2, Alto do Camurujipe 1 e

2, Tripas, Saboeiro, Mangabeira e Península

WORLD CUP 2014

WATER AND SANITATION

INVESTMENT PLAN (2010 - 2014)

Ports

Investment Amount (R$ Million) Project Description

São Paulo (Santos) 119.9 Pier improvement and internal access

Rio de Janeiro 314.0 Implementation of 3 Piers

Manaus 89.4 Adaptation of 3 Storage Depots to Passenger Terminals, restauration of luggage storage, pier expansion,

front-area urbanization with parking lots and passangers crossways.

Natal 53.7 Adaptation of old installations to Passenger Terrminals, Pier expansion, area urbanization with parkings and

better accesses

Fortaleza (Mucuripe) 105.9 Construction of Passenger Terminal, new pier pavement, area urbanization with parkings and better accesses

Salvador 36.0 Adaptation of old installations to Passenger Terrminals, Pier expansion, area urbanization with parkings and

better accesses

Recife 21.8 Adaptation of a storage Depot and construction of a new passenger Terminal, pavement, and area urbanization

with parkings and better accesses

TOTAL PORTS 740.7

WORLD CUP 2014

INVESTMENT PLAN (2010 - 2014)

WEBSITE FOR THE WORLD CUP 2014

OLYMPIC GAMES 2016

Area Investment (US$ million)

Investment COJO *

(US$ million)

Total (US$

million) %

Olympic Villages

1,270.25 0.0 1,270.25 20.69

Sport Installations

476.65 282.54 759.19 12.13

Security 235.95 0.00 235.95 3.77

Technology 202.93 35.82 238.75 3.81

Transport 3,730.00 0.00 3,730.00 59.59

Total 5,915.78 318.36 6,234.14 100.0

% 94.91 5.09 100.0

*COJO = Organization Committee for the Games

OLYMPIC GAMES 2016

POTENTIAL INVESTMENT IN INFRASTRUCTURE

35

AGENDA

Actions planned for the Olympic Games 2016 are perfectly connected with those for the Word Cup in 2014. Major projects in Rio include:

Implementation of street works, special works, micro and

partial drainage and / or adjustments in existing streets, to

facilitate access to huge sports events;

Reurbanization in areas sorrounding Maracanã and the

harbour, with a great and significant social impact in

installations, housing and transport;

Corredor T5 - Barra da Tijuca – Penha (Bus Rapid Transit);

OLYMPIC GAMES 2016

36

Express corredor connecting Lagoa with Barra boroughs;

Connection between Deodoro and Barra boroughs (BRT);

Connection Barra and Penha (BRT);

Rio Olympic Park;

Olympic Centers;

Media Village in Barra area;

Olympic Village;

Main Press Center and International Broadcasting Center

Sponsors Village and Live Site.

AGENDA

OLYMPIC GAMES 2016

Source: Bovespa (São Paulo Stock Exchange) Elaboration: Abdib

MARKET VALUE OF INFRASTRUCTURE COMPANIES

720,120,306,086

765,378,921,112

374,535,852,471

474,171,527,275

0

100,000,000,000

200,000,000,000

300,000,000,000

400,000,000,000

500,000,000,000

600,000,000,000

700,000,000,000

800,000,000,000

900,000,000,000

1,000,000,000,000

August 2008 – October 2011 (stocks in R$)

Total with Petrobras Total without Petrobras

EXTERNAL INVESTMENT IN INFRASTRUCTURE

INFRASTRUCTURE INVESTMENT FUNDS

Operating funds:

AG Angra Infraestrutura: W&S + infrastructure sectors

FIP Brasil Energia: energy and renewable energy

Infra Brasil FIP: W&S + transport, energy

BRZ Logística : transport

FIP Caixa Ambiental: W&S

FIP Energia PCH: Small Hydro and Thermal plants

FI FGTS : all infrastructure sectors

Note: Committed Capital = US$ 6.3 billion

How to get funding for investment?

New rules, approved last June and already in practice, offer suspension of income tax or reduction to zero for investment in infrastructure

One goal: enhance infrastructure investment by tax reduction for domestic and foreigner investors. Another goal: improve a long term private funding for infrastructure projects and help public banks in the effort to provide additional long term funding for the sector.

Source: BNDES (Social and Economic Brazilian Development Bank)

Economic sector

2003 2004 2005 2006 2007 2008 2009

2010

Agrobusiness 4.6 6.9 4.1 3.4 5.0 5.6 6.9 10.1

Industry 14.1 13.1 18.5 19.6 18.0 30.1 29.6 41.4

Basic industry 1.9 2.6 4.7 6.2 6.6 5.7 10.7 8.7

Services and Retail

3.7 3.4 4.6 5.6 8.7 11.6 21.1 30.7

Infrastructure 9.2 13.9 15.2 16.6 26.6 37.9 68.1 77.5

Total 33.5 39.9 47.1 51.4 64.9 90.9 136.4 168.4

Basic industry (%) in global outlays

5.7 6.5 10.0 12.1 10.2 6.3 7.8 5.2

Infrastructure (% ) in global outlays

27.5 34.8 32.2 32.3 41.0 41.7 50.0 46.0

BNDES FINANCING BY ECONOMIC SECTORS

Original values, in R$ billion

43

Investors in World Cup 2014 are twice welcome:

They can cooperate to a very important event

from both social and economic point of view

Projects legacy will equally benefit society and

those who accomplished them or helped in

their accomplishment

FINAL MESSAGE

Thank you!

ASSOCIAÇÃO BRASILEIRA DA INFRAESTRUTURA E INDÚSTRIAS DE BASE

www.abdib.org.br abdib@abdib.org.br

THANK YOU!