Albérico Mascarenhas Secretary of Finance of State of Bahia Federation of Industry of State of São Paulo – FIESP May/19

1. PUBLIC-PRIVATE PARTNERSHIP PROGRAM OF THE STATE OF BAHIA Albérico Mascarenhas Secretary of Finance of State of Bahia Federation of Industry of State of São Paulo – FIESP May/19, 2005

2. Characteristics of Bahia’s PPP Law

3. PPP-Bahia Essential Concerns Creation of a benchmark to attract private investments, aiming at strengthening the State infrastructure. To prevent the use of such benchmark to defraud the fiscal strictness and imbalance the State finance. To explore supplementary services to provide the project with better financial sustainability and to reduce the tariff impact.

4. Fiscal Accountability Limits for annual expenditure Expenses must not exceed 5% of the Current Net Income. In the Federal Law, 1% of the CNI ended by prevailing. The State is prevented to enter into new agreements if the established limit is exceeded.

5. PPP-Bahia Concepts, principles and transparency • Minimum amount: The monetary expression of an amount higher than R$ 20 million prevailed. • Total access to data and reports, including for any reviews. • Inclusion in the Quadrimester Report on Fiscal Management and submitted in Public Hearing;

6. Essential Clauses to PPP’s Agreements Essential clauses Sharing with the public administration of economic profits, resulting from the risk reduction of partnership financing, and of ascertained productive gains when performing the agreement; Pledged installment withholding, in the last years of the agreement, to ensure the wholeness of the enterprise, which will be released after the agreement termination.

7. PPP/Bahia - Guarantees Creditor’s Protection Pledged and personal guarantee or insurance; Issuance of performance certificates directly and in favor of the project financing institution; Financing entity allowed to receive payments trough the obligor fund.

8. PPP/Bahia - Guarantees Creditor’s Protection Obligor Fund. Association with State Resources, including the Royalties’ and CIDE’s, other than taxes. The contractor may collect receivables of the contracting party from third parties, other than taxes.

9. PPP/Bahia - Guarantees Obligor Fund • Creation of the Obligor Fund for the PPP of the State of Bahia – FAGE Bahia. • Guarantee with a contribution up to 30% of the annual obligations paid by treasury resources; • Sources: ‣ 20% from the Royalties, while the 30% is not reached and up to 20% after exceeding the ceiling or if equal to it; ‣20% from CIDE (idem Royalties); ‣ other budgeting resources and additional credits; ‣The Fund’s financial applications; ‣ Internal and external credit operations; ‣ donations, allowances, contributions and legacies.

10. PPP/Bahia - Control and Management Management Council - Composition • Management Council of the PPP Program: I - the Finance Secretary (Chairman); II - the Planning Secretary (Deputy Chairman); III - the Administration Secretary; IV - the Government Secretary; V - the State Attorney General; VI - up 2 members, at the Governor free discretion. • State Secretary Head Officers, with direct interest on a certain partnership;

11. PPP/Bahia - Control and Management Executive Department and Regulatory Agencies Executive Secretary for the Management Council, associated with the Finance Secretariat. Regulatory Agency Roles (AGERBA).

12. PPP-Bahia Priority Areas Education, health and social welfare; Public transports (roadways, railways, ports and airports); Sanitation; Safety, defense, justice and imprisonment system; Science, research and technology, including information technology; Agribusiness (irrigated agriculture and agricultural-industrialization); Other public areas of social or economic interest.

13. Major Projects

14. PPP-Bahia Major Projects to be Performed Ocean Outfall Roadways and Railways Prisons

15. Ocean Outfall

16. A second Ocean • Outfall • Customer’s assistance • - Salvador • - Lauro de Freitas • - Existing Basin • Densifications Implementation of New Outfall and Supplementary Works TITLE BASIN LIMITS SYSTEMS’ LIMITS LIMITS BETWEEN OUTPOURINGS MUNICIPAL DISTRICT LIMITS RISING STATION PREVIOUS CONDITIONING STATION INTERCEPTOR PRESSURE PIPES OCEAN OUTFALL Implemented basins that contribute to the Rio Vermelho Outfall Implemented basins currently contributing (provisional) to the Rio Vermelho Outfall and final contribution to the Jaguaribe Outfall Basins planned to be implemented in the second phase which will contribute to the Jaguaribe Outfall

17. Implementation of New Outfall and Supplementary Works (CONTINUED) • Work Characteristics • Land outfall: • 1,509 m of extension and • 1600 mm of diameter • Previous Conditioning Station (ECP) to a flow of 3.m3/s • Ocean Outfall: • 3,648 m of extension • 5,9 m3/s capacity. • Investment: R$ 260 million TITLE BASIN LIMITS SYSTEMS’ LIMITS LIMITS BETWEEN OUTPOURINGS MUNICIPAL DISTRICT LIMITS RISING STATION PREVIOUS CONDITIONING STATION INTERCEPTOR PRESSURE PIPES OCEAN OUTFALL Implemented basins that contribute to the Rio Vermelho Outfall Implemented basins currently contributing (provisional) to the Rio Vermelho Outfall and final contribution to the Jaguaribe Outfall Basins planned to be implemented in the second phase which will contribute to the Jaguaribe Outfall

18. Enterprise’s Benefits • It will serve a population of approximately 1,900,000 inhabitants. • Implementation of the Jaguaribe system will provide sanitation services to an area of approximately 20,000 hectares. • Improvement of the users’ life quality and reduction of expenditure on the public health sector. • Possibility to fulfill all basin sanitation depletion with significant densification, in Salvador and its metropolitan region, without damages to tourism - major economic activity and attraction of such cities, as well as preventing the spreading diseases transmitted by water.

19. Other Depletion Systems

20. Roadways and Railways

21. BA-093 Duplication- 23.3 km and Repair Services of de 81.7 km Entre Rios BR-101 Feira deSantana BA-093 Alagoinhas Araçás Catu BR-324 BR-116 Pojuca Candeias Camaçari Simões Filho SALVADOR Location: Road Junction with BR 324 (RMS) BR 101 road junction (Entre Rios). Extension: 105 km Works: • Duplication: Road Junction of the BR 324 -Dias D'Ávila – 23.3 km; • Repair Services: from Dias D'Ávila - BR 101 Road Junction BR 101 – 81.7 km. Investment: R$ 144 million.

22. HIGHWAY AISLE IBOTIRAMA - ITABUNA Location: Ibotirama – Bom Jesus da Lapa – Brumado – Vitória de Conquista – Itabuna Extension: 738 km. Works: Recovery and Suitability Estimate Investment: R$ 317 million

23. Prisons

24. Penitentiary System Place Requirements in the Imprisonment System

25. Penitentiary System 1 prison unit in the capital 6 inland units (1) (1) Municipalities:Itaberaba, Vitória da Conquista, Seabra, Irecê, Santo Antônio de Jesus and Eunápolis.

26. Institutional Environment Favorable For Investment

27. Favorable Institutional Environment for Investment

28. PPP/Bahia – Economic Growth GDP BRAZIL X GDP BAHIA

29. PPP/Bahia – Fiscal Indicators Fiscal Responsibility Law Personnel and Duties Public Debt * RCL = Net Revenue

30. Primary Surplus

31. Evolution of Public Debt

32. www.sefaz.ba.gov.br BANNER

33. Albércio Mascarenhas • Secretary of Finance of State of Bahia • e-mail: alberico@sefaz.ba.gov.br Internet: www.bahia.ba.gov.br Internet: www.sefaz.ba.gov.br Banner of PPP Bahia