VistaBrazil May 2015

Transcription

Viewpoint
Economy & Business
Energy & Environment
Politics, Law, Society
International Affairs
n Finally,
n Infrastructure
n Oil
n Politics
n Diplomatic briefs
audited financial results
issues
n Mining
notes
and finance
n Economy in brief
n Business news
n Banking
& gas in brief
n Petrobras news
n Biofuels in brief
n Electricity sector
n Environmental news
n Science & technology
in brief
n Defense issues
n Legal issues
n Social issues
n International
trade
Veirano Advogados’ Monthly review of economic, legal, and political developments
05.15
Petrobras has finally submitted audited financial statements for the second half 2014 to the Brazilian Securities
and Exchange Commission (CVM).
On 22 April, the company board of directors reported a
US$7.1 billion loss for 2014, reflecting approximately US$2
billion in graft-related losses. This compares to a profit of
US$7.9 billion in 2013.
Petrobras’ board of directors reported a US$7.1 billion loss for 2014
By department, that figure represents US$1.1 billion
embezzled through the company’s supply arm, US$660
million through the exploration and production department, and US$231 million through the gas and energy
department.
May 2015 · Volume 04 · Number 05
Finally, audited financial results
and a business plan in the offing
photograph: Agência Petrobras
1
16
Asset write-downs are reportedly as high as US$16.8
billion, including US$14.7 billion in asset depreciation,
or impairment. The company has announced that it
will cut investments by 37 percent next year, from
US$39.5 billion to US$25 billion.
The 10-member board of directors voted 7 to 2, with
one abstention, in favor of approving the statements.
All affirmative votes were cast by government-selected
board members.
José Guimarães Monforte, the independent member who
represented holders of non-voting shares, abstained from
voting. He resigned abruptly after the company went
…
Economy & Business
VistaBrazil is published monthly
Produced by Prismax Consultoria
Editor: Georges D. Landau
Production: Blakeley Words+Pictures
© 2015 · Veirano Advogados and Prismax Consultoria
All text rights reserved
Vista Brazil is sponsored by Veirano Advogados
Founding Partner: Ronaldo C. Veirano
Managing Partner: Pedro Aguiar de Freitas
2
16
Rio de Janeiro
Av. Presidente Wilson, 231 / 25º andar
20030-021 – RJ
(55 21) 3824 4747 Phone
(55 21) 2262 4247 Fax
[email protected]
www.veirano.com.br
São Paulo
Av. Brigadeiro Faria Lima,
3477 / 16º andar
04538-133 - SP
(55 11) 2313-5700 Phone
(55 11) 2313-5990 Fax
Porto Alegre
Rua Dona Laura,
320 / 13º andar
Rio Branco – 90430-090 – RS
(55 51) 2121 7500 Phone
(55 51) 2121 7600 Fax
Brasília
SCN Qd. 2
Ed. Corp. Financial Center – Bloco A
10º andar/Sala 1001 – 70712-900 – DF
(55 61) 2106 6600 Phone
(55 61) 2106 6699 Fax
Disclaimer
This newsletter is intended to provide general information regarding recent events,
developments, and trends in Brazil. It is not intended, nor should it be relied on, to
provide legal analysis or legal advice on any of the information covered in the newsletter.
Veirano Advogados and Prismax Consultoria cannot ensure against or be held
responsible for inaccuracies. To the full extent permissible by law Veirano Advogados
shall have no liability for any damage or loss (including, without limitation, financial loss,
loss of profits, loss of business, or any indirect or consequential loss), however it arises,
resulting from the use of any material appearing in this publication or from any action or
decision taken as a result of using information presented in the publication.
ahead and released the audited statements, complaining
that board members were given less than two hours to
review the documents and had no opportunity to make
an informed decision.
As well, the structure of the board continues to encourage
a split between government and non-government
members.
Mauro Rodrigues da Cunha, who represents minority
holders of voting shares, voted against the release. He has
decided not to run for re-election because of his frustration with the government’s role in Petrobras.
Determined to move ahead, Petrobras president Aldemir
Bendine announced on 28 April that he would have a
new business plan prepared within 40 days and that a
complete administrative reorganization is underway at
the company.
Similarly, Silvio Sinedino, the independent member who
represents company workers, voted against the release of
earnings because he disagreed with the formula used to
calculate asset write-downs.
Ferreira confirmed as chair
As expected, Vale CEO Murilo Ferreira has been voted in
as chair of the Petrobras board of directors. He was the
Brazilian government’s nominee for the post. With the
government holding 7 out of 10 seats on the board, the
choice of Ferreira is seen to reflect an effort to create a
board with more technical market experience and less
overt political ties.
While the professionalization of the board under Ferreira
must be welcomed, critics are concerned about the potential for conflict of interest arising from his simultaneous
oversight of Vale.
A new business plan
With US$95.8 billion in net debt, Petrobras will require
five years’ worth of operations to meet its obligations,
according to the recently released financial statements.
The release of the audited results has eased concerns that
the country will be given a sovereign rating downgrade.
The Ibovespa stock exchange entered a bull market on 24
April, two days after the financial statement was made
public, jumping more than 20 percent from this year’s low.
Selling on the home front
At the same time, Petrobras is preparing to raise at least
US$993 million and as much as US$1.3 billion with an
offering of debt securities in the Brazilian market, according to Reuters. Maturity for the three portions of the offer
will range from 5 to 10 years, paying above yields on
comparable government inflation debt.
…
Veirano Advogados
Offices in Rio de Janeiro, São Paulo, Porto Alegre, and Brasília …
Viewpoint
Economy & Business
Infrastructure issues
Postponing transportation concessions
After meeting with 30 ministers and senior officials from
financial institutions on 25–26 April, President Dilma Rousseff has delayed announcing the expected transportation
infrastructure concessions program until next month.
Reportedly, more time is needed to define financing and
other project details, especially with respect to railways.
3
16
Petrobras’ chief financial officer Ivan Monteiro
Bradesco, Banco do Brasil, BTG Pactual, and Votorantim
will coordinate the sales.
Large investors such as fixed-income investments funds
and state pension funds are the target market for the offer
– the first such domestic sale by the company in 15 years.
It is worth noting that the company’s 2015Q1 profits,
posted on 15 May, were just 1.1 percent down from 2014Q1,
at US$1.8 billion. That exceeded analysts’ expectations and
was seen as “very positive” by chief financial officer Ivan
Monteiro. The weather is still stormy, but the good ship
Petrobras seems to be steering toward calmer waters.
Veirano Advogados
White-Collar Crimes …
It is hoped that clear rules, particularly in relation to
National Bank for Economic and Social Development
(BNDES) financing mechanisms, will attract foreign
investors. Improved regulatory agencies are also considered key to ensuring that infrastructure concessions models are viable and robust.
Finance Minister Joaquim Levy has been wooing US investors ahead of the concessions program launch. He has
met World Bank and International Monetary Fund representatives as well as international investors, for whom
he highlighted BNDES project financing. Infrastructure
investment is seen as a crucial driver for economic growth
in Brazil, and the government cannot afford to get the concessions program wrong.
The transcontinental
Brazil, Peru, and China are negotiating an agreement to
build a railway to cross South America, according to Folha
de São Paulo newspaper on 12 May. The railway will start
in the state of Rio de Janeiro and pass through the states
of Minas Gerais, Goiás, Mato Grosso, Rondônia, and Acre.
The route will take it through much of the Brazilian
agribusiness belt before it runs through Peru. It is therefore expected to help boost commodity exports as it links
the Brazilian Atlantic coast with the Peruvian Pacific coast.
Chinese Premier Li Keqiang is due to visit Brasília this
week to seal the partnership with Brazil. It will reportedly
form part of a Chinese agreement to invest US$53.3 billion in the Brazilian infrastructure, mining, energy, and
manufacturing sectors, according to O Globo newspaper.
Unnamed sources indicated that the investments would
be financed by Caixa Econômica Federal and the Industrial and Commercial Bank of China (ICBC).
The transcontinental rail project is expected to cost at
least US$10 billion and will be part of the infrastructure
program to be announced next month by President Dilma
Rousseff. The Brazilian government hopes Chinese businesses will bid for sections of the new train line.
One of the negotiations closest to completion involves
the Campinorte–Lucas do Rio Verde part of the line,
between Goiás state and Mato Grosso state. Chinese
Railway Construction Company (CRCC) is seeking
partnerships with Brazilian firms.
Ports in play
Following federal audit court approval in the first week of
May, the Special Ports Department (SEP) now expects to
launch its first round of block 1 tenders for port terminal
concessions by August.
Block 1 tenders originally included 29 terminals in the
states of Pará and São Paulo at an estimated US$1.54
billion, but that offer package will be split up. The specific
terminals will be announced by July, but the focus is
on Santos port in São Paulo and Vila do Conde, Belém,
Outeiro, Santarém, and Miramar in Pará.
Economy & Business
photograph: petrobras
Viewpoint
Viewpoint
Economy & Business
Brazil added almost 2 million fixed broadband connections from 2014Q2 to the end of 2015Q1, according to
the National Telecommunications Agency (Anatel).
The América Móvil group, comprising Claro, NET, and
Embratel, has 31.6 percent of the market, Oi has 26.6 percent, Telefônica Brasil/Vivo has 16.7 percent, and
GVT has 12.5 percent.
The government’s Broadband for All program has the
goal of ensuring that 95 percent of the population has
access to service by 2018, according to a statement by
Communications Minister Ricardo Berzoini on 12 May.
photograph: wikimedia commons/Konstantin von Wedelstaedt
Broadband surges
TAM Airlines’ parent company announced the start of feasibility studies to develop its first international and domestic hub in northeastern Brazil
4
16
Connecting water systems
São Paulo state water utility SABESP has launched a
prequalification tender to develop a plan to connect the
Cantareira water system with those in neighboring states.
The project is attracting record levels of interest. Some 33
enterprises have expressed interest and 14 proposals had
been received by 6 May.
SABESP will finance 10 percent of the project and the
Veirano Advogados
Infrastructure & Projects …
National Bank for Economic and Social Development
(BNDES) will provide US$268 million in financing.
A brand new airport
The consortium that wins the tender for Salgado Filho airport in Porto Alegre, the capital of the state of Rio Grande
do Sul, will be required to build a second airport within
the city environs. This is the first time that a winning bidder will be required to build an entire new airport.
A hub for the northeast
Late last month, LATAM Airlines Group, the parent
company of Brazil’s TAM Airlines, announced the start
of feasibility studies to develop its first international and
domestic hub in northeastern Brazil. The intention is to
increase cargo flows from the rising exporting region and
to improve connectivity, as domestic carriers base their
operations in southern and southeastern Brazil.
A northeastern hub will offer significantly shorter flights
to Europe in comparison to southern cities in Brazil. TAM
is considering Salvador, Natal, and Recife as the host city,
which will be selected by the end of this year. Operations
are slated to start in December 2016.
Mining notes
Absence makes the buyer fonder?
In a move reminiscent of OPEC in times past, Brazilian
mining giant Vale has said it may be willing to cut its
production of iron ore by 30 million tonnes in order to
improve profit margins on the commodity, whose value
has been badly battered in recent months.
Vale still intends to complete its expansion plans, which
involve spending almost US$20 billion to increase production capacity by 100 million tonnes per annum, but suggested it may temporarily abstain from using that capacity.
Some analysts are skeptical the company will follow
through, but concerns about oversupply suggest a real
imperative. Vale, BHP Billiton, and Rio Tinto – the three
largest producers – have all posted recent production
…
Water works for Paraíba
The northeastern state of Paraíba is working with the
World Bank and the European Investment Bank (EIB) to
expand water and sewerage services in the region and to
improve the state water management agency. The state
government has already received a US$125 million loan
from the World Bank and is in negotiations for the same
amount from the EIB.
Economy & Business
photograph: Vale
Viewpoint
averaged R$1.88/US$ over the past two decades, from
a record low of 0.01 in January 1993 to a high of 3.95 in
October 2002.
Strengthening foreign investment
Data from the Ibovespa stock exchange reveal that foreign investors were responsible for more than 51 percent
of trading in 2014, the greatest proportion in 20 years.
Foreign investors bought a net US$2.5 billion in Brazilian
stocks in April, the most for any month since 2010. The
Ibovespa has gained 14 percent in the past two months.
5
16
increases despite weakening demand from China and
slumping prices.
Brazil exported 71.6 million tonnes of iron ore in 2015Q1
compared with 66.7 million tonnes in 2014Q1, according
to the Sinferbase iron ore and base metals association. Of
that, Vale shipped 64.3 million tonnes. At the same time,
however, domestic sales of iron ore fell from 6.15 million
tonnes to 5.87 million tonnes.
More ships on the horizon?
Vale, the world’s top iron ore producer, is reportedly in
talks with Chinese shipbuilders over the construction and
leasing of new Valemax megacarriers. The company has
not confirmed reports that it may be negotiating with
China Cosco Holdings to build 20 ships and with China
Merchants Shipping Company to build 10.
Thumbs up for Vale
Moody’s has affirmed its current ratings and boosted
its outlook for Vale from negative to stable. The ratings
agency believes that the company’s credit profile and
operations are solid and that its increase in volumes and
ore grades – a result of an aggressive expansion program –
will partially mitigate the effect of low commodity prices.
It does not expect the company’s credit metrics to show
substantial improvement until 2017–18, however, as iron
ore prices are likely to remain low through next year.
Alcoa pulls in its horns
Aluminum and lightweight metals producer Alcoa is
planning to curtail the remaining 74,000 tonnes of
smelting capacity at its São Luís facility in Brazil, following
curtailment of 85,00 tonnes of capacity in May 2014 and
12,000 tonnes in October. The refinery at the facility will
continue normal operations.
Banking and finance
Weakening currency
The real has weakened further in May, reaching 3.07 to
the US dollar from 2.99 in April of 2015. The currency has
Net foreign inflows in 2015 so far have been US$5.8
billion. It’s food for thought that inflows were US$6.76 for
the entire year in 2014.
Downgrading banks
Moody’s ratings agency has downgraded the global
ratings of long-term currency deposits in five Brazilian
banks: Bradesco, Itaú Unibanco, Itaú BBA, HSBC Bank
Brasil–Banco Multiplo, and Votarantim.
The bank ratings were lowered from Baa2 to Baa1 and
their outlook changed to negative, but the ratings reflect
neither improvement nor deterioration in credit fundamentals. Instead, the move is a result of a new methodology. The negative outlook is based on substantial
holdings of Brazilian government securities and thus high
direct exposure to the country’s creditworthiness.
Moody’s decision should not be regarded as the whole
picture. Banco Votarantim posted a major increase in
…
Veirano Advogados
Banking & Finance …
Vale is reportedly in talks with Chinese shipbuilders over the construction and leasing of new Valemax megacarriers
Economy & Business
2015Q1 earnings, rising by US$15 million from the previous quarter. At the same time the bank achieved a 3.8
percent drop in administrative and personnel expenses.
But one success story
In the midst of a slowdown in the Brazilian banking sector, one international bank is seeing solid numbers from
its Brazilian subsidiary. Analysts were surprised by the
strong performance of São Paulo-based Banco Santander
Brasil, a subsidiary of Spanish Banco Santander. The bank
reported net earnings 41 percent higher year on year in
2015Q1, causing its stock to rise 6 percent. The result is
the strongest since the first quarter of 2012.
Raising capital
6
16
The Brazilian government hopes to raise US$2.96 billion
through an IPO of 20 percent of Caixa Seguridade, the
insurance arm of Caixa Econômica Federal state bank.
The offer is planned for November, according to Valor
Econômica newspaper and will be managed by a syndicate of Banco do Brasil and Itaú Unibanco. BTG Pactual,
UBS, Goldman Sachs, Brasil Plural, BofA Merrill Lynch will
reportedly also participate.
Economy in brief
Interest rates versus inflation
The Brazilian benchmark Selic interest rate was bumped
up to its highest level in six years on 29 April.
The Central Bank raised the rate 50 basis points to 13.25
percent, noting in the meeting minutes of the Monetary
Policy Committee (Copom) that “The gains achieved in
the fight against inflation – exemplified by benign signs
stemming from medium and long-term outlook indicators
– aren’t yet sufficient.”
The statement is alluding to inflation that reached 8.22
percent in mid-April and continues to rise, though the
pace slowed slightly over the past month. It is now widely
considered to be almost impossible to contain annual
inflation below the 6.5 percent ceiling of the target range
for 2015. At the same time, the economy is expected to
contract by more than 1 percent this year.
Economists surveyed by the Central Bank forecast that
the economy will shrink 1.2 percent in 2015, leading
policy makers to cut the key rate to 11.5 percent next
year, according to the Washington Post. They also expect
the cost of living to rise by 8.26 percent in 2015 and 5.6
percent in 2016.
Table 1: Economic indicators,
Brazil vs United States
Rate (%)Reference date
BrazilUS
GDP growth
0.3
0.2
2014Q3
Inflation
8.13
–0.1
March 2015
Interest 13.25
0.25
29 April 2015
6.2
5.5
March 2015
Unemployment Brazil versus United States
The most recent economic indicators make for an interesting comparison between Brazil and the United States
(see Table 1). On every measure, the Brazilian picture is
comparatively bleak, yet its GDP growth is still a whisker
ahead of the US figure.
Work and life for the average Brazilian
The Brazilian Institute of Geography and Statistics (IBGE)
released its quarterly survey of employment on 7 May,
and it paints a less-then-rosy picture. Unemployment
rose from 6.5 percent in 2014Q4 to 7.9 percent in
2015Q1, the highest since the beginning of 2013.
As usual, regional and age-related disparities were evident in the results. Unemployment was highest in the
northeast, at 9.6 percent, and lowest in the south, at 5.1
percent. Some 17.6 percent of 18–24-year-old workers are
unemployed.
According to the survey, workers’ average monthly
income rose 0.8 percent year on year in 2015Q1, but
this must be set against an analysis by the Department
of Statistics and Socioeconomic Studies (DIEESE) of the
current cost of a consumer basket of staple foods.
The study revealed price rises of from 1.71 to 18.3 percent
from May 2014 to April 2015 in the 18 state capital cities.
Every city experienced an annual increase, and for the
month of April, only Manaus saw a drop in prices. Unsurprisingly, São Paulo and Rio de Janeiro are in the top three
in terms of the overall cost for basic food items. Bread,
beef, soy oil, milk, and tomatoes increased the most.
Electricity is responsible for a quarter of the annual
consumer price index rate, bumping the index by 19.34
percent over the past year. The health and personal
…
Veirano Advogados
Labor & Employment …
Viewpoint
Economy & Business
Reflecting perceptions of the overall economic picture
and their purchasing power, Brazilians bought 6.36
percent fewer new vehicles in April in relation to March
and 24.35 percent fewer than in April 2014. According to
the National Vehicle Distribution Federation (Fenabrave),
sales of new vehicles excluding trucks, buses, and
agricultural vehicles declined 18.39 percent year on year
in the first four months of 2015.
7
16
Working Brazilians who want to buy real estate, however,
got some good news – hypothetically speaking. Real
estate prices have fallen 3.47 percent across the country
in real terms in 2015Q1, according to the Fipe-Zap index.
That is, prices rose 1.08 percent overall against inflation of
4.55 percent in the same period. And again, Rio and São
Paulo are the most expensive places to live.
Industrial production shrinks
Industrial production contracted 3.2 percent in Brazil in
2014, a trend that has continued in 2015Q1, according to
the Brazilian Institute of Geography and Statistics (IBGE).
Manufacturing climbed by a slim 0.3 percent January
but fell an adjusted 1.3 percent in February. Production
of capital goods fell 18 percent in the quarter and output
of durable goods fell 15.8 percent. The automotive sector
dropped 4.2 percent.
photograph: wikimedia commons/Herr stahlhoefer
care segment continue to increase strongly, whereas
transportation costs rose only marginally.
The Brazilian Institute of Geography and Statistics (IBGE) estimate 201 million tons of total production in cereal, grain, and oil seed harvests
corn, soybean, and wheat production. If the estimate
of approximately 202 million tons is accurate, it will
represent a record in 20 years of harvest growth.
Brazilian Institute of Geography and Statistics (IBGE)
data support the CONAB report, with an estimate of 201
million tons of total production in cereal, grain, and oil
seed harvests.
IMF weighs in on Brazil
Grain production stays healthy
The International Monetary Fund (IMF) announced in
mid-May that it considers it crucial for Brazil to meet its
2015 primary surplus goal. That surplus consists of excess
revenues before interest payments on debt, and because
it is a key indicator of the ability to repay debt it is carefully
scrutinized by investors.
The Brazilian agricultural agency, the National Supply
Company (CONAB), on 12 May published its estimate
of the 2014–15 grain harvest. Expected increases over
the 2013–14 season of 4.4 percent in crop volume
and 0.3 percent increase in area planted is ascribed to
Brazil has a fiscal target of 1.2 percent of GDP for 2015
and must engage in some severe belt tightening to stay
the course. The IMF estimates that the gross indebtedness of the country will rise from 65.2 percent of GDP in
2014 to 66.2 percent in 2015 and 2016, and estimates
that nominal debt will drop from 6.2 percent of GDP in
2014 to 5.3 percent in 2015.
Business news
Scooping up distressed assets
Brookfield Asset Management, Canada’s largest alternative-asset manager, is considering investing more than
US$1.1 billion in commercial real estate, sugar, ethanol,
and construction in Brazil. Distressed assets will reportedly account for about two-thirds of the total.
According to Bloomberg, Brookfield’s new investments
may include US$268 million in financing for OAS SA,
the construction company that filed for legal protection
from its creditors in São Paulo last month. OAS has been
banned from bidding on new projects with Petrobras
amid an investigation into whether its executives received
bribes in exchange for work contracts.
Viewpoint
Economy & Business
BASF thinks big
German chemical company BASF plans to triple its business in Latin America through to 2025, when Brazilian
revenues would amount to €9 billion. The company plans
to invest €1.1 billion between 2013 and 2017, including
€540 million in an acrylic complex in Camaçari, Bahia.
Oil & gas in brief
That is the largest disbursement by the company in Brazil
in 104 years and is expected to generate US$300 million
per year to Brazilian’s trade balance.
Microsoft retails in Brazil
Playing catch-up with mega-rival Apple, which opened its
first Brazilian retail outpost in 2014, Microsoft launched
its first retail store late last month, in São Paulo.
8
16
The plan is to open 100 outlets in Brazil by the end of
2016, and to rebrand franchise stores previously operating
under the Nokia brand, which was purchased by Microsoft in 2014. In addition to selling Nokia/Microsoft cell
phones, the locations will offer company services such as
Office 365, Skype call credits, and Xbox Live Gold.
Round 13 confirmed
The National Petroleum, Natural Gas, and Biofuels
Agency (ANP) announced on 7 May that Round 13 of bidding on oil and gas exploratory blocks would be held on
7 October, with the preliminary RFP to be published on 11
June. In January, the round was pushed back from the first
to the second half of the year, so it is welcome news that
it is now underway.
Of 269 blocks to be offered, 84 are offshore and 185 are
onshore.
The question now is when Brazil might hold a tender
for participation in the huge pre-salt offshore reserves,
but low global oil prices make that unlikely before 2017,
according to Mines and Energy Minister Eduardo Braga
on 4 May. Pre-salt development is hampered because of
the high cost of production in the ultra-deep regions, and
a price of US$80/barrel is considered by some analysts
to be a viable threshold.
Tendering rules in the spotlight
Veirano Advogados
Oil, Gas & Biofuels …
that permits winners to own any oil produced as long
as they meet investment and content rules, adhere to
environmental and other legislation, and pay a royalty.
The pressure is such, however, that some revision of the
more stringent production-sharing rules applied to presalt areas seem likely for 2016 or 2017.
Relatedly, the National Petroleum, Natural Gas, and
Biofuels Agency (ANP) in late March published Resolution 18, which introduces new regulatory discipline on
tendering procedures for oil and gas exploration and
production blocks.
The procedural steps reveal a new emphasis. Submission
and judgment of the bids has moved up in the sequence,
coming before the qualification of bidders. Thus, only
winning bidders undergo the qualification phase, which is
now more stringent. The requirements encompass legal,
fiscal, and labor compliance, and economic, financial, and
technical capacity.
Repsol Sinopec at work
Spanish-Chinese company Repsol Sinopec is preparing to
invest US$5–6 billion within six years to develop a giant
deposit in ultra-deep waters of the Campos basin. Of the
three fields discovered in block BM-C-33, the main one
is Pão de Açúcar, where estimates indicate reserves of
over 700 million barrels of oil. Repsol Sinopec estimates
a production of 15 mcm/day of gas in the field, about half
the volume that Brazil imports from Bolivia.
Despite increasing criticism of the local content policy
dictating that Petrobras must take a share in any pre-salt
production, changes to the rules will not be considered
until 2016, according to Mines and Energy Minister
Eduardo Braga. That means the auction planned for
October will not include any pre-salt areas.
Talking to Iran
Rather than being offered under a production-sharing
system, the 269 areas up for sale in October this year
will be tendered under a 20-year-old concession regime
Iran and Brazil have signed a memorandum of understanding to build a refinery that will be able to process
300,000 b/d of crude. Iran expects to supply the refinery
feedstock exclusively, which will give it a long-term
…
Viewpoint
9
16
Petrobras news
Stakes in offshore blocks
Petrobras in mid-April received approval to sell a 30
percent stake in offshore block BM-POT-16 to BP and
a 50 percent stake in offshore block BM-P-2 to Total,
according to Reuters.
Petrobras will keep a 30 percent stake in BM-POT-16,
which is located in the Potiguar basin off the northeastern coast. Petrogal and IBV Brasil will have 20
percent each. BM-P-2, in the southern Pelotas basin,
will be split equally between Total and Petrobras.
A big boost from pre-salt
Oil production from the pre-salt fields will rise by
more than two-thirds this year, according to Petrobras
CEO Aldemir Bendine. Output has already risen from
667,000 b/d in December 2014 to 800,000b/d, and
Bendine forecast 70 percent growth this year.
export market for its crude. The deal involved the National
Iranian Oil Refining Distribution Company (NIORDC) and
an unnamed Brazilian company, according to the Iranian
Mehr news agency.
Electricity sector
Enel good to go
Italian company Enel Green Power announced on 30
April that it had secured 20-year power purchase agreements (PPAs) with Brazilian distributors for the 90 MW
Cristalandia wind project in Bahia state. The wind park
will begin operation in 2017 and will be able to produce
over 350 GWh a year.
Bi-national power project
Brazil is negotiating with Bolivia over the construction of
a hydroelectric power station to be built on the Bolivian
side of the Madeira River, according to Mines and Energy
Minister Eduardo Braga.
The plant will have 3 GW of installed generation capacity
and is expected to begin operation in 2022. Bolivia will
export the excess electricity to Brazil and use the revenue
to meet its portion of the plant financing.
Shedding distribution companies
Eletrobras intends to focus on the profitable transmission
and generation segments of the electricity sector, and to
that end is preparing to privatize various distributors. The
holding company is said to be seeking a single buyer for
distributors Cepisa, Ceal, Ceron, and Eletoacre.
In addition it will merge distribution subsidiaries Boa Vista
Energia and Companhia Energética de Roraima (CERR)
prior to privatizing them, according to Estado de São Paulo.
The new company will be offered alongside Companhia de
Eletricidade do Amapá (CEA) and Amazonas Energia as
a single block for potential buyers, after Eletrobras subsidiary Eletronorte absorbs the generation and transmission
operations of the latter.
On 14 May, the government announced that Celg-D
would be part of the privatization program, just two
months after Eletrobras bought a 51 percent stake in the
distributor.
Investing in renewables
Odebrecht Energia, a unit of Brazilian construction
company Odebrecht SA, is seeking investors to purchase
stakes in its renewable-energy assets, which include
hydroelectric power plants, wind energy parks, and solar
energy plants, among other projects.
Bloomberg reports that the company is in talks with four
international pension funds with interest in its wind, biomass, and hydroelectric operations. Its major projects in
Brazil are the Santo Antônio hydroelectric power plant in
Rondônia state and the Teles Pires hydroelectric power
plant Pará and Mato Grosso states.
Application denied
The holders of hydroelectric concessions at Belo Monte,
Jiraú, and Santo Antônio had their applications to be
exempted from responsibility for delays rejected on
28 April by the Brazilian Electricity Regulatory Agency
(ANEEL). They will therefore have to buy electricity on the
free market and are expected to lose up to US$1.5 billion.
…
Veirano Advogados
Electric Energy …
Economy & Business
photograph: wikimedia commons/Divulgação Petrobras/Agência Brasil
Viewpoint
The concession holders had asserted that they were
exempt from culpability for a series of problems including
strikes, massive trespassing, and political factors.
Reserve energy auction
Brazilian Electricity Regulatory Agency (ANEEL) has postponed the next reserve energy auction by two weeks, to
15 June, and set the maximum price at US$194/MWh.
The auction will include six LNG-fired plants with a total
installed capacity of 1.07 GW. Distributors will be offered
20-year supply agreements from new gas-fired thermoelectric plants, including combined-cycle plants. Contracts,
which begin on 1 January, will oblige generators to operate
plants at full capacity for a minimum of eight hours a day.
10
16
Environmental news
Sustainability projects get grant
The Brazilian government has authorized a US$10 million
grant for environmental projects on indigenous lands.
Projects include the management of forest-derived products, resource extraction, family agriculture, and fishing,
all geared toward enabling indigenous people to have
sustainable livelihoods.
The grant, which will go towards projects in Amazonas,
Mato Grosso, and Pará states, will come from the
Amazon Fund, which is coordinated by the National Bank
for Economic and Social Development (BNDES).
Managing tropical forests
Following 18 months of judicial dispute, the federal
government on 28 April signed a 40-year lease on the
exploitation of tropical forests in Pará, as part of tropical
forest lots managed by the National Forest Service in
Amazonia. The four new lots occupy 362,000 hectares
Science & technology
Edible food packaging
Brazilian scientists have unveiled an innovative and sustainable product: edible food packaging. Derived from
beets, carrots, papaya, and passion fruit, the packaging
is as strong as traditional synthetic plastic wrap, with
identical texture and protection capacity, and generates
no packaging waste.
The product is the result of two decades of research
and has already cost about US$200,000. The Brazilian Enterprise for Agricultural and Livestock Research
(EMBRAPA) is currently seeking partners to commercialize the product.
Korean support for technology
South Korea’s Samsung plans to invest US$5 million in
Brazil over the next five years to finance startups and
support digital entrepreneurship. The initiative is part
of a memorandum of understanding on technological
cooperation recently signed by Brazilian Science,
Technology, and Innovation Minister Aldo Rebelo and
his Korean counterpart, Choi Yanghee.
A bright future for tech
Secretary for Information Technology Policy Virgílio
Almeida, at the Ministry of Science, Technology, and
Innovation, predicated this month that the Brazilian
IT and communications sector would represent 10.7
and produce 200,000 m³ of legal and sustainable wood,
generating revenue of R$80 million. The Forest Service
will initiate an electronic monitoring management system
in real time for these areas.
South Korea’s Samsung plans to invest US$5 million in Brazil
percent of GDP by 2022 and would employ double the
1.5 million who worked in the sector in 2013.
The Brazilian Association of Information Technology
and Communication Companies (Brasscom) forecasts
a more modest increase to 8 percent of GDP within
that timeframe. That is healthy, nonetheless.
Veirano Advogados
Environment …
Economy & Business
photograph: wikimedia commons/Philip Jägenstedt
Viewpoint
Economy & Business
Politics in brief
Does the left hand know?
On 13 May, just hours after approving a bill to limit sick
leave and pension payments to surviving relatives, the
Chamber of Deputies voted in favor of an amendment
that raises federal spending on retirees. The amendment
complicates the pension payments issue and represents
a setback for Finance Minister Joaquim Levy.
11
16
Levy needs legislation that raises taxes and cuts expenditures to keep the fiscal adjustment on track, and he has
been lobbying legislators for weeks to that effect.
The government will hope that the setback can be
reversed in the Senate or it may impose a presidential
veto. There is no guarantee, however, that a veto could be
made to stick.
A PMDB president?
The Brazilian Democratic Movement Party (PMDB) is
reviewing its policy program, hiring economists to advise it
and improving its communications strategy. The party will
hold a convention in September to refine its platform and
is considering terminating its alliance with the Workers’
Party (PT) before the next presidential election and putting forward its own candidate. If it does so, it will be the
first time in 20 years.
Although he denies interest, Eduardo Cunha, the speaker
of the Chamber of Deputies, is rumored to be in campaign mode for the post. Michel Temer, the current vicepresident in Dilma Rousseff’s administration, is another
prospective candidate, although he will be 78 in 2018.
Neves tackles Venezuela
On 7 May, Senator Aécio Neves, president of the Brazilian Social Democracy Party (PSDB) and runner-up in the
presidential election last autumn, announced the creation
of a special congressional commission that will travel to
neighboring Venezuela to evaluate the situation of political prisoners and the escalating violence. Neves made the
announcement after a Senate Foreign Relations Committee hearing earlier this month, which included the testimony from wives of two Venezuelan political prisoners.
“A nation like Brazil, with a president who is a former
political prisoner, cannot remain silent when it sees a
neighboring country with nearly 90 political prisoners. It
is time for the government to act as most Brazilians hope,
in defense of democracy. It is an unacceptable omission,”
he said at the hearing.
After Neves’s announcement, Foreign Minister Mauro
Vieira held a press conference in which he announced
that he had met with Venezuelan government officials
just days before, urging them to set a date for the national
election that should take place before the end of 2015.
Labor law inches forward
The Brazilian Chamber of Deputies, the lower house of
the Congress, has passed a bill proposed by the government to limit access to unemployment insurance. The
bill is the first of two key measures to cut social-security
benefits that the economic team led by Finance Minister
Joaquim Levy has forecast will lower expenditures by
US$5.9 billion in 2015.
The bill still has to be passed in the Senate, whose
president, Renan Calheiros, has been critical of the
austerity program because of its effect on workers. The
bill is already in effect because it took the initial form
photograph: wikimedia commons/Ministério da Cultura do Brasil/Pércio Campos
Senator Martha Suplicy is expected to run again for mayor of São Paulo
of a presidential decree, but if it fails to be approved as
legislation by 1 June the decree will expire.
Suplicy makes her departure
Senator Martha Suplicy, a former federal minister and
mayor of São Paulo and a member of the Worker’s Party
for 33 years, officially left the party on 28 April. She did
not indicate which party she intends to join, though it is
widely expected that she will run again for mayor of São
Paulo under the Brazilian Socialist Party (PSB) banner.
President Dilma Rousseff may be relieved to see her go.
Suplicy has been searing in her recent criticisms of the
party and the government.
Abreu makes her mark
Agriculture Minister Kátia Abreu has released a sixpronged Agricultural Defense Plan to improve control of
pests and livestock diseases and cut red tape. “We will
make this country not just an example of innovation,
…
Viewpoint
Viewpoint
Economy & Business
photograph: EID
technology, and creativity, but we will elevate Brazil to
a leading international example of quality agricultural
defense standards,” said Abreu at the 6 May launch.
The plan envisages a model of efficient management –
with effective cooperation and joint action by federal, state,
and municipal organs and officials – and includes nearly
50 specific actions. The first phase will be implemented by
June 2016 and the second by 2020.
12
16
Legal issues
Navantia has signed a contract with the Synergy Group to work on its project to build Macaé-class patrol boats for the Brazilian Navy.
Filing suit against contractors
Defense issues
Petrobras has filed civil lawsuits against Engevix and
Mendes Júnior and has announced plans to take legal
action against Camargo Corrêa, OAS, and Galvão
Engenharia. The state-owned oil giant is demanding
US$429.5 million in compensation for its losses on
allegedly inflated invoices from the construction
companies.
Building patrol boats
State-owned shipbuilder Navantia has signed a contract
with the Synergy Group to work in an advisory capacity
with the latter’s shipbuilding subsidiary, Estaleiro Ilha
SA (EISA), on its project to build Macaé-class patrol
boats for the Brazilian Navy.
On 15 May, Brazilian prosecutors indicated that they had
obtained court orders to seize US$327 million in assets
from construction firms under investigation. Camargo
Corrêa, Galvão Engenharia, Sanko Sider, Engevix, and
OAS have all been subject to asset seizures, amounting
to 1 percent of the contracts the companies signed with
Petrobras plus relevant fines.
Spanish Navantia drew up a memorandum of understanding with Brazilian Synergy group in 2014 to
support a joint bid under the Brazilian Programa de
Obtenção de Meios de Superfície (PROSUPER) surface
ship program. The contract is the first to be signed as a
result of that MoU.
Engevix, now seeking to raise funds, has sold its stake
in the airports of Natal and Brasília to Argentinean
Defense Minister Jaques Wagner has announced that
…
Inquiring about missile systems
Brazil will make an official inquiry about the potential purchase of the Russian Pantsir-S1 missile system. A waiting
list for the system extends to 2019. Wagner noted that
cuts to Brazilian military expenditures had postponed the
inquiry about three Pantsir-1 batteries of up to 18 units.
The price tag is an estimated US$1 billion.
Russia and China are competing to sell military hardware to Latin America in general and Brazil in particular,
as the region is considered a very promising market.
Brazilian military spending increased by 7 percent from
2003 to 2010 but it is still relatively modest by global
standards.
Veirano Advogados
Government & Regulatory …
Another objective is to strengthen laboratories and
research centers that focus on combating and preventing
diseases. The plan will also update various sanitary standards and laboratory procedures.
Economy & Business
Petrobras board members investigated
According to the Financial Times, the Brazilian Securities and Exchange Commission (CVM) is investigating
former Petrobras board chair Guido Mantega, former
board member Jorge Gerdau Johannpeter, and Luciano
Coutinho, who is the head of the National Bank for Economic and Social Development (BNDES) and a current
board member.
13
16
The three are accused of approving debt targets in the
Petrobras 2014–18 business plan while imposing a fuel
pricing policy that made those targets almost certainly
unreachable.
The pricing policy, which has never been publicly detailed
and which has recently been terminated, was reportedly
designed to shield the local market by selling imported
diesel and gasoline at a loss. The drop in international
prices has closed the price gap and made the policy
redundant, but not before causing Petrobras to lose
US$19 billion from 2011 to 2014.
Critics suggest that the policy was prompted more by the
desire to use the state-owned company as an instrument
of inflation control than by concern for consumers. In
any event, it was certainly maintained at the expense of
investors.
Politicians face formal charges
It seems that corruption comes in various political
stripes. Andre Vargas of the Workers’ Party (PT), Pedro
Correa of the allied Progressive Party (PP), Luiz Argolo
of the opposition Solidarity (SDD), and Aline Correa of
the PP have been charged with embezzlement, money
laundering, and related crimes in connection with the
corruption scheme at Petrobras. The first three were
already in custody.
Supreme Court nominee
Attorney Luiz Edson Fachin is President Dilma Rousseff’s
Supreme Court nominee and faced more than eight hours
of questioning by the Committee on Constitution and
Justice – a record length of time for vetting candidates.
The 57-year-old defended himself against criticism that
he is overtly sympathetic to the Landless Workers Movement (MST) and in connection with a video in which he
asked for support for Rousseff in the 2010 election. The
nominee asserted that he would conduct himself with
impartiality and independence if appointed to the bench,
and was ultimately approved by 20 votes to 7.
Older, and therefore wiser?
The Chamber of Deputies on 6 May approved a constitutional amendment that had been under consideration by
the Congress for over 10 years. It raises the compulsory
retirement age for Supreme Court justices from 70 to
75, with the immediate effect that President Dilma Rousseff will have just two nominations to the bench to make
before the end of her term, not the five she expected.
photograph: United Nations Military Observer Course in Finland
Corporación America in order to raise funds. Engevix and
Corporación America are both part of the Consortium
Inframérica, which holds 100 percent of the Natal airport
and 51 percent of Brasília.
The UN is opposed to the reduction of the age of criminal responsibility
At the beginning of the month, child and adolescent rights
groups demonstrated across 20 states and 70 cities in
the country against ratification of the bill, which would
change the standard established by the national penal
code in 1940. That standard stipulates that children under
18 are not legally responsible for their crimes but does not
preclude punishment in juvenile detention centers.
Social issues
Despite the protests, domestic support for lowering the
age is 82–93 percent, depending on the survey. President
Dilma Rousseff, however, is not among supporters of
the legislation. If it passes, 16-year-olds will be subject
to adult sentencing before they are legally allowed to
smoke, drink, drive, work full time, get married, or be
emancipated from their parents.
Lowering the age of criminal responsibility
Dengue fever surge continues
The United Nations on 11 May affirmed its opposition to
the reduction of the age of criminal responsibility from 18
to 16 in Brazil, as the government is proposing to do via a
constitutional amendment.
Brazil is experiencing a surge in dengue fever, the potentially fatal mosquito-borne virus. Nationwide in the first
quarter of 2015 there have been 235 percent more cases
than in the same period last year.
…
Viewpoint
Economy & Business
Health Minister Arthur Chioro asserts that figures for 2014
were exceptionally low, and that the outbreak in 2013 was
worse than the current one. Even so, the Brazilian Armed
Forces have been called in to help health workers who are
going door to door attempting to locate mosquito breeding
grounds in São Paulo, and the United States issued a travel
warning in late April.
14
16
There is no vaccine against dengue fever.
Strike at Eletrobras
Workers at state-owned electricity utility Eletrobras held a
three-day strike in mid-May over unpaid benefits, including
a share of company profits owed from last year. Eletrobras
has 25,000 employees, and its workforce at subsidiaries Eletronorte, Companhia Hidrelétrica do São Francisco
(Chesf), and Furnas Centrais Elétricas were all affected.
Diplomatic briefs
Execution in Indonesia
Brazilian Rodrigo Gularte was executed by firing squad
in Indonesia on 29 April. The convicted drug smuggler
had been diagnosed with paranoid schizophrenia and
reportedly did not understand what was about to happen
to him. Brazil described the execution as “a serious event
in relations between the two countries.”
Intervening with North Korea?
President Park Geun-hye of South Korea has remarked
that Brazil could play a key role in persuading North Korea
to participate in diplomatic negotiations. Brazil still has
diplomatic ties with North Korea and is the only South
American country to have embassies in both Koreas.
Striking diplomats
Brazilian diplomats around the globe went on strike on
12 May to demand better salaries, payment of overdue
housing allowances, and official passports for all ministry
personnel posted abroad. Brazilian law stipulates that
30 percent of employees at the foreign missions must
remain on the job, so the protest is in fact more job action
than full strike.
BRICS bank gets ready
Veirano Advogados
Dispute Resolution …
photograph: facebook/LuizBacci
A total of 229 people have died, and at 368 cases per
100,000 residents it amounts to an epidemic by World
Health Organization standards. Officials note, however,
that the outbreak is not nationwide. More than half of
the cases were in São Paulo, where severe drought has
prompted residents to store water. The number of cases
in the state has tripled since 2014.
The BRICS New Development Bank will be operational
by the end of 2015 or early 2016, and membership will
be open to all members of the United Nations, subject to
agreement from the board of governors, said Vice Finance
Minister Shi Yaobin of China. The bank will appoint a governor and deputy governor early July, when it holds its first
board meeting.
Brazilian Rodrigo Gularte was executed by firing squad in Indonesia
International trade
Talking about Mercosur
Presidents Dilma Rousseff of Brazil and Tabare Vazquez
of Uruguay will meet on 21 May to discuss Mercosur
issues and bilateral trade between their two countries.
Mercosur currently prohibits member countries from
making bilateral agreements with third parties outside
the bloc or with other blocs, insisting that any such agreements must be approved by consensus within the bloc.
Vazquez has indicated that he wishes to recover lost
trade with Brazil, which continues to be the main trading
partner for Uruguay despite the recent decline. With
respect to the Mercosur consensus rule, Uruguay has
been a steadfast critic along with Paraguay, but Brazil is
new to the table in wanting greater trade liberty.
Development, Industry, and Foreign Trade Minister
Armando Monteiro Neto recently noted in a meeting with
the Chamber of Deputies Foreign Affairs Committee
…
Viewpoint
Viewpoint
Economy & Business
Surplus/deficit (%)
photograph: blakeley words+Pictures
Table 2: Monthly trade
balance by sector
Beef–17.9
Coffee–6.4
Copper ore
+27.4
Crude oil
+0.9
Iron ore
–43.7
Pork–21.2
15
16
Soybeans–38.7
Tobacco–8.5
that the consensus rule impedes trade and is the main
barrier to the EU–Mercosur trade negotiations, which
have been sputtering along for a decade. Monteiro noted
that Brazil wishes to send a clear signal to Argentina of
the urgent need to reach a trade agreement with the
European Union.
Balance of trade
Brazil had a trade surplus of US$491 million in April, as
reported by the Ministry of Development, Industry, and
Foreign Trade. The average trade balance over the past
half century has been US$634.03 million, hitting a high of
US$5,659.37 million in July 2006 and bottoming out at
US$–4,058.14 million in January last year.
Last month’s figure is the second monthly surplus after
Brazil had a trade surplus of US$491 million in April, as reported by the Ministry of Development, Industry, and Foreign Trade
two months of significant deficit, somewhat bettering the
March result of US$458 million.
The monthly surplus is down almost 3 percent from April
2014, and exports continued their nine-month fall, dropping 23.16 percent year on year (see Table 2 for details).
Imports also fell, by 23.7 percent to US$14.66 billion.
Hungary wants agricultural cooperation
Hungarian Deputy State Secretary for Agricultural
Development István Loránd Szakáli, held talks in Brasília
on strengthening agricultural cooperation between
Hungary and Brazil, most particularly with respect to
organic farming and imports of GMO-free soy.
The Hungarian constitution bans the cultivation of
genetically modified crops. Szakáli also pointed to
aquaculture as an important area of cooperation.
Bullish on beef?
One of the hoped-for results of President Dilma Rousseff’s upcoming visit to the United States, set for 30 June,
is the go-ahead to export Brazilian beef to the US market.
Brazil exported 37,000 tonnes of cooked beef to the
United States in 2014, as the processed product presents
no risk of introducing so-called mad cow disease, but
fresh beef shipments have been banned.
A green light from the United States could ultimately
translate into access to Asian markets for beef, which
have been shut since 2012 in response to a mad cow
disease scare.
The largest markets for Brazilian beef of late have been
Hong Kong, Russia, and the European Union, although
under restricted trade conditions. Japan, China, and
South Korea have banned all beef imports for the past
two and half years.
Veirano Advogados
International Trade / WTO …
Poultry–18.3
Viewpoint
Economy & Business
Upcoming events
XVII Annual Inflation Targeting Seminar
21–22 May 2015Rio de JaneiroCentral Bank of Brazil
[email protected]
SolarTech Expo Brazil 2015
2–3 June 2015São Paulo
[email protected]
4th Private Equity Latin America Forum
8–9 June 2015New YorkHSBC and EY
[email protected]
Workshop da Moody’s de Operações Estruturadas
9 June 2015São Paulo
Moody’s
[email protected]
Hedge Fund Brazil Forum
15–16 June 2015São Paulo
Latin Markets
[email protected]
–
Investment Opportunities in the Brazilian
19 June 2015New YorkBrazilian–American
Pharmaceutical MarketChamber of Commerce
brazilcham.com/contact-us
Brasil Offshore E&P exhibition
[email protected]
23–26 June 2015Rio de JaneiroTechnip and others
16
16
According to the Brazilian Tree Industry (Ibá), first-quarter
export revenues from pulp, paper, and wood panels
totaled US$ 1.8 billion, a 3.1 percent year-on-year increase.
Within that result, wood panels exports were up 43.3
percent but paper exports were down 3.5.
photograph: wikimedia commons/Korean Culture and Information Service/Jeon Han
Pulp exports promising
The outlook for Brazilian pulp production and exports
looks promising. Some 2.8 million tons of cellulose pulp
was exported in 2015Q1, 19.9 percent more than in the
same period a year ago
comprehensive partnership with Vietnam and boost
bilateral trade to US$10 billion by 2020. Nguyen noted
that the potential for cooperation in energy, agriculture,
science, technology, biotechnology, defense, and aviation
remains untapped.
Veirano Advogados
VistaBrazil 05.15
The industry’s trade balance over the period was US$1.4
billion, up 7.5 percent year on year.
Deepening ties with Vietnam
At the 25th Global Summit of Women, President Dilma
Rousseff welcomed Vietnamese Vice-President Nguyen
Thi Doan and noted that Brazil wishes to strengthen its
Vietnamese Vice-President Nguyen Thi Doan
TitleDatePlaceSponsorContact

VistaBrazil May 2015

Transcription

Similar documents

Challenges and Opportunities to Renewables and Energy Efficiency

Gaucho Brazilian Steakhouse_PP1

Alvaro POSTER

Doc 1985 - Céu Aberto

Ministério da Educação Secretaria de Educação Superior

Release Inglês

Central Market

brazilian food truck?

The largest exporting industries from the South Region of Brazil

Contrainte/Restraint: New media arts practices from