1. GERMAN BRAZILIAN ECONOMIC MEETING 2012 XXX Entrepreneurial Meeting and XXXIX Meeting of the Joint Commission on Economic Cooperation Frankfurt, Germany - July1 st to July 3 th, 2012 Ralph Lima Terra Executive Vice President ASSOCIAÇÃO BRASILEIRA DA INFRAESTRUTURA E INDÚSTRIAS DE BASE

2. 2011 Prices INFRASTRUCTURE INVESTMENT US$ Billion ACTUAL INFRASTRUCTURE INVESTMENT 2011 Prices: Figures updated by inflation over the period Exchange rate 2011 : 1 US$ = 1.67 R$ “ “ 2010: 1 US$ = 1.76 R$

3. INVESTMENT REQUIREMENTS IN INFRASTRUCTURE 2011-2015 (US$ billion ) ELECTRIC POWER US$ 80.7 OIL AND GAS (*) US$ 241.2 TRANSPORT/ LOGISTICS US$ 97.7 TELECOMMUNICATIONS US$ 56.0 WATER AND SANITATION US$ 48.3 TOTAL US$ 523.9 (*) E&P, downstream, gas and energy. Exchange rate: 1 US$ = 1.76 R$

5. OPPORTUNITIES AND PLANS BY SECTOR GENERATION Expansion plan will increase the installed capacity (109,578 MW) with additional 61,560 MW (23% renewable). ELECTRIC POWER 10-YEARS EXPANSION PLAN (2011/2020) This expansion plan has an integrated vision of the demand expansion and different available sources. TRANSMISSION Physical expansion of the transmission system (99,649 Km in Dec. 2010) is expected to happen with additional 42,553 Km Global Substation System (222,119 MVA in Dec.2010) will add new 69,251 MVA

6. E & P After-Salt areas  11th Bid Round – 174 blocks (planned) 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 (Petrobrás 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

7. 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 2012

8. 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.

9. OPPORTUNITIES AND PLANS BY SECTOR TRANSPORT Ports A technical study by Government to evaluate both the institutional organization and management efficiency of the global Port sector is ready and under analysis at the Civil Cabinet. Study structure:  Sector characteristics under several aspects: institutional, physical, economic, management, and legal;  Proposals for directions such as: o Model on how to explore the port infrastructure o Management of a public port o Port operations efficiency o Institutional organization  Suggestions on how to elaborate a law bill for the institutional organization

10. Airports Investment plan (2010 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 (2011) 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.

11. OPPORTUNITIES AND PLANS BY SECTOR TRANSPORT Private sector new opportunities 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. 2011 Three of major airports went under a bid last February (Brasilia, Viracopos, and Guarulhos ). Management will be done by private concessionaires who are investing 9.6 US$ billion over the concession period (25, 30 and 20 years respectively) and 1.7 US$ billion just until the World Cup 2014. Next airports to be under bid expected to be Rio International and Belo Horizonte.

12. 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.

13. 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 Last June, a bid promoted by ANATEL (59 lots) awarded 6 telecom companies for very high speed wideband (4G) and rural wideband as well.

14. PAC II (2011 – 2014) OPPORTUNITIES AND PLANS BY SECTOR Source: Federal Government. Exchange rate: 1 US$ = 1.76 R$

15. Source: Federal Government. PAC II (2011 – 2014) OPPORTUNITIES AND PLANS BY SECTOR Exchange rate: 1 US$ = 1.76 R$

16. WORLD CUP 2014

17. 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

18. 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 efficient way Water & Sanitation 18 WORLD CUP 2014

19. 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 AB AB AB AB Security AB AB Airports Ports AB AB AB Key Indicators- Minimum level - 2014 18 Candidate cities Key Indicators - Ideal level - 2014 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

21. 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

22. WORLD CUP 2014: Arenas by Host City

24. Airports INVESTMENT PLAN (2010 - 2014) InvestmentAmount (US$ Million) São Paulo (Viracopos, Guarulhos) 1,217 Rio de Janeiro (Galeão, Santos Dumont) 491 Belo Horizonte (Confins) 289 Porto Alegre 687 Curitiba 228 Brasília 491 Cuiabá 51 Manaus 186 Fortaleza 161 Salvador 25 Natal 328 Recife 11 TOTAL AIRPORTS 4,165 WORLD CUP 2014

25. CityProjectObjectives 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 CuritibaReduction, 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 AlegreNew water collectionReduce cost of chemical products for water treatment Recife/OlindaCapibaribe 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 JaneiroSewage 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) = 7.3 US$ b Some examples :

26. Ports InvestmentAmount (US$ Million)Project Description São Paulo (Santos) 86.4 Pier improvement and internal access Rio de Janeiro 178.4 Implementation of 3 Piers Manaus 50.8 Adaptation of 3 Storage Depots to Passenger Terminals, restauration of luggage storage, pier expansion, front-area urbanization with parking lots and passangers crossways. Natal 30.5 Adaptation of old installations to Passenger Terrminals, Pier expansion, area urbanization with parkings and better accesses Fortaleza (Mucuripe) 84.7 Construction of Passenger Terminal, new pier pavement, area urbanization with parkings and better accesses Salvador 20.5 Adaptation of old installations to Passenger Terrminals, Pier expansion, area urbanization with parkings and better accesses Recife 12.4 Adaptation of a storage Depot and construction of a new passenger Terminal, pavement, and area urbanization with parkings and better accesses TOTAL PORTS463.7 WORLD CUP 2014 INVESTMENT PLAN (2010 - 2014)

27. WEBSITE FOR THE WORLD CUP 2014

28. OLYMPIC GAMES 2016

29. *COJO = Organization Committee for the Games OLYMPIC GAMES 2016 POTENTIAL INVESTMENT IN INFRASTRUCTURE

30. 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

31. 31 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

33. Source: BNDES (Social and Economic Brazilian Development Bank) BNDES FINANCING BY ECONOMIC SECTOR Original values, in US$ billion

34. 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: R$ 19.4 billion = US$ 11.6 billion

35. RECENT RULES TO FOSTER INFRASTRUCTURE Creation of a private market for investment project long-term financing, with focus on infrastructure development, as an additional source to BNDES.  Law 12,431, in 2011, Jun. 24  Decree 7,603, in 2011, Nov. 9  Statement nº 18 (air transport ministry), in 2012, Jan. 23  Statement nº 9 (transport ministry), in 2012, Jan. 30  Statement nº 9 (ports ministry), in 2012, Feb.2  Statement nº 47 and 90 (electric power ministry), in 2012, Feb. 6 and Mar. 2  Statement nº 76 (national integration ministry), in 2012, Feb.15  Statement nº 181 (science & technology ministry), in 2012, Mar.7

36. RECENT RULES TO FOSTER INFRASTRUCTURE Law 12,431 and Decree 7,603 Objective: Regulate a private market for long-term financing with focus on infrastructure investment projects, as an additional source to public banks and BNDES. Issue process of infrastructure debentures Regulate how to approve investment projects in infrastructure (and research and development as well), to make them eligible to fiscal benefits Infrastructure projects will be approved for eligibility by the correspondent sector Ministry (by Statements)

37. Debentures specifically issued to implement infrastructure investment projects in priority areas; Program to issue debentures will end 2015, December 31st; RECENT RULES TO FOSTER INFRASTRUCTURE Fiscal Benefits on Income Tax Without lawWith new law Foreign investment 15%zero Individual (resident)15 to 22.5%zero Company (resident)25%15%

38. Priority Areas to be covered in infrastructure RECENT RULES TO FOSTER INFRASTRUCTURE Sectors (i) Logistics and transport; (ii)Urban Mobility; (iii)Energy; (iv)Telecommunications; (v)Radio -transmission; (vi)Water and Sanitation; (vii) Irrigation Objective (i) implementation; (ii) expansion; (iii) maintenance; (iv) recovery; (v) adjustments; (vi) modernization

39. - Reduction of Long-Term Interest Rate from 6% to 5.5% per year - Governmental procurement of R$ 8.43 billion (US$ 4.2 b) on equipments and vehicles to be done in 2nd. half of 2012 -Preference to over 80 items manufactured in Brazil for governmental procurement (with a price margin from 8 to 25% depending on the technology content) until June 2017 VERY RECENT RULES TO FOSTER INFRASTRUCTURE Released on June 27

40. Source: Bovespa (São Paulo Stock Exchange) Elaboration: Abdib MARKET VALUE OF INFRASTRUCTURE COMPANIES

41. EXTERNAL INVESTMENT IN INFRASTRUCTURE Brazil has improved its ranking among the countries on direct foreign investment 2010 ranking2012 ranking China1 st India3 rd 2 nd Brazil4 th 3 rd United States2 nd 4 th Germany5 th Australia7 th 6 th Singapore24 th 7 th UK10 th 8 th Indonesia20 th 9 th Malaysia21 th 10 th Source: AT Kearney Elaboration: Abdib

42. 42 Investors in Brazil are twice welcome: They can cooperate to Brazil’s very important development 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

43. Thank you! ASSOCIAÇÃO BRASILEIRA DA INFRAESTRUTURA E INDÚSTRIAS DE BASE www.abdib.org.brabdib@abdib.org.br VIELEN DANKE! THANK YOU!