Kluwer Construction Blog

Nuclear energy provides about 3% of Brazil’s electricity. In November 2006 the government announced plans to complete Angra 3 and also build four further 1000 MWe nuclear plants from 2015 at a single site. Angra 3 construction approval was confirmed by Brazil’s National Energy Policy Council in June 2007 and received Presidential approval in July. Environmental approval was granted in March and all other approvals by July 2009. In December 2008, Eletrobrás Termonuclear S/A (“Eletronuclear”) signed an industrial cooperation agreement with Areva, confirming that Areva will complete Angra 3 and be considered for supplying further reactors. Areva also signed a services contract for Angra 1. First concrete for Angra 3 was due in 2009. A construction licence was granted by the National Nuclear Energy Commission (CNEN) at the end of May 2010, and construction resumed two days later, in June. The plant is expected in operation at the end of 2015 after 66 months.

President Dilma Rouseef wants to make a firm position that the country’s airport system will indeed improve in a fast track model. In her 3rd day in Office the new President has decided to privatize the construction and operation of 2 new airport terminals in the State of São Paulo. President Dilma also decided to open up the capital of INFRAERO (the Brazilian Airport Infrastructure Company) and create an special Secretariat – directly attached to the the Presidency’s Office – to oversight civil aviation business in Brazil.

Auction date has been defined

The meeting held between Dilma Roussef, the Brazilian President-elect and members of the State Office and the Government transport sector sealed the date for the auction for the bullet train that will connect Campinas-São Paulo-Rio de Janeiro. According to Dilma’s decision, it will take place on November 29, 2010.

Requests had been made by businessmen to postpone this date, and in view of this, the meeting was held yesterday been the President-elect and the members of the government responsible for the auction.

According to allegations of interested parties, the administration had delayed in disclosing the rules due to the electoral process, which allegedly [...]

In any cross-border financing, parties (banks specially) take a political risk in the sense that a collapse of the existing political order in the borrower’s country or the imposition of new taxes, exchange transfer restrictions, nationalisation or other laws may jeopardise the prospects of repayment and recovery. The term political risk is widely used in relation to Project Finance and can conveniently be defined to mean both the danger of political and financial instability within a given country and the danger that government action (or inaction) will have a negative impact either on the continued existence of the project or on the cash flow generating capacity of a project.

The success in the financing of an infrastructure project, by means of Project Finance, depends on all the parties involved satisfactorily complying with their various contractual obligations under the Project Finance Documentation. Lenders, as well as the other participants, in accordance with the level of risk being assumed and in proportion to the benefits received from the implementation of the project, will undertake the due diligence needed to adequately measure the risks involved. The viability of the Project Finance model, in short, is based on the consistency and efficiency of its network of agreements. Such documents must be structured and negotiated in a consistent manner with the respective legislation applicable in the jurisdictions involved, and be constructed in such a way as to allow full implementation of their respective terms and conditions, notwithstanding the natural complexity of the same, in a form which will satisfactorily identify, mitigate, allocate and allow the adequate management of the various risks involved in the Project Finance.

On July 13th 2010 Brazilian Federal Government launched bidding documents regarding the concession regime and procedures for implementation and operation of the High-Speed Rail (TAV – Trem de Alta Velocidade) that will connect the cities of Rio de Janeiro, São Paulo and Campinas. The project specifies that the construction, operation, and maintenance will be granted to the consortium that provides the lowest fare for service. The final schedule calls for the railway to be completed by 2017, although the Brazilian Federal Government anticipates the line will be partially open before the 2016 Summer Olympics in Rio de Janeiro. TAV is worth US 20 billion.

US$ 22 billion to be invested in these projects in the in the Brazilian railway system

Continuing our last discussion on PPPs in Brazil, we should note that PPP LAW applies to government entities (including mixed-capital companies) directly or indirectly controlled by the Federal Government, States, Federal District and Municipalities. Article 2 of PPP LAW defines PPP as follows: “Public-Private Partnership is an administrative concession contract that may assume the form of either a sponsored or an administrative concession contract.” PPPs are expected to be implemented concurrently with existing concession contracts, focusing on infrastructure projects. PPP LAW provides for sponsored concession and administrative concession.

The administrative concession is defined in Ar [...]

Federal Law No. 11079, 2004 [PPP LAW] instituted the general rules for bidding and contracting of Public-Private Partnerships (PPPs) within the realm of public administration. This is an important volley in the Brazilian government efforts to develop funding and management alternatives for public works in furtherance of the bidding system instituted by the Federal Law No. 8666, 1993 [Brazilian BIDDING LAW] and to reduce the state presence in the Brazilian economy.

Firstly introduced in the Anglo-Saxon world as an alternative to privatization and to the former system, under which the government administration was responsible for ownership, maintenance and operation of assets of public interes [...]

Trend for ADRs, specially Arbitration in Latin America

For the last decade or so, development of arbitration as an effective method for out-of-court resolution of disputes in Latin America has been intense, with new local legislations being adopted in several countries of the region. In many of these countries, consolidation of and credibility on arbitration have been dependent on the support given by local courts. This is exactly what happened in Brazil.

Arbitration finally came to place in Brazil

The Brazilian Arbitration Law was enacted in 1996 (Law 9307, of September 23, 1996) and brought the long hoped-for binding power and compulsory enforcement of the arbitration clause. The new La [...]