The National Bank for Economic and Social Development (BNDES) granted a loan of R$7 billion for Line 6-Orange of the São Paulo subway, built and operated by a public-private partnership (PPP) with the state government.
The amount accounts for 41% of the R$17 billion invested in the work, which started in 2015, stopped the following year and resumed in October 2020, after the Spanish group Acciona took over the PPP. The forecast is to complete the works in 2025.
The financing operation includes a pool of ten banks, including national, foreign and multinational organizations. Sought out, Acciona did not comment on the loan. According to BNDES executives, the operation marks a new stage in the financing of infrastructure works in the country, using common practices in the sector in developed countries.
The loan for the Linha Universidade concessionaire, created by the Spanish company to run the PPP, is on the list of the ten largest operations in the history of the BNDES, behind the R$ 23.4 billion granted to the operator of the Belo Monte Hydroelectric Power Plant, from some loans for Petrobras to invest in refineries and gas pipelines and in financing for the works of the Jirau and Santo Antônio hydroelectric plants, on the Madeira River, in Rondônia.
Line 6-Orange will have 15 stations, connecting Brasilândia, in the northern zone, to the Liberdade region, in the expanded center. The line will be integrated with lines 1-Blue and 4-Yellow, from the Metro, and 7-Rubi and 8-Diamante, from CPTM. It is estimated that it will transport 633,000 people a day.
Conditions
Although equally billionaire, the loan to the concessionaire of Line 6-Orange has its peculiarities. The main innovations, according to the BNDES, are guarantees based on the project itself, instead of bank guarantees or company assets, and a construction contract – known in the market as EPC, as its acronym, in English, for engineering, management purchases and construction – which places risks such as increased expenses or delays in the works on the construction company’s account, not the concessionaire’s.
According to Petrônio Cançado, the BNDES’ Infrastructure Credit director, the idea is to make this model the new standard at the bank. “The main thing is to have the EPC contract well done, with mechanisms that allow for the protection of the project. Thus, the package of guarantees is defined on a case-by-case basis, providing comfort for us to bring investors,” said Cançado, who will leave in January the position he has held since July 2019.
In the R$7 billion loan, BNDES will not be alone. Ten financial institutions – the executives of the development bank avoided naming names – will enter as guarantors of half the amount. In the other half, BNDES will take the risks alone. The model was already used in BNDES loans, but the difference from other operations for Line 6-Orange is that, like the development institution, private banks will accept the project itself as a guarantee, without corporate guarantee or assets from companies.
“All ten banks are taking the project risk. Generally, banks do not run this risk”, said Leonardo Pereira, superintendent of the Sanitation, Transport and Logistics Area at the BNDES. “BNDES is also running the risk of the project. The mechanisms allowed”, completed Cançado.
The information is from the newspaper The State of São Paulo.
Reference: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
