Regionalized Concession Project for Public Water Supply and Sewage Services in the State of Amapá Project presentation October 28th, 2020 2 Agenda 1. Introduction 2. Project Overview 3. Engineering Studies 4. Financial Modeling 5. Legal Aspects 6. Performance Indicators 3 Introduction // Disclaimer Conclusions presented here result from the analysis of quantitative and qualitative data, in addition to projections of future events, which are part of the expectations of the government of the state of Amapá, the Amapa Sewage and Water Company (Caesa) and their advisors at the time of the analysis. Such future events may not occur and results presented may differ from the actual numbers. The use of different sources of information and the application of different data processing methodologies can result in differences between the content of this presentation and that of documents that have the same object of this work. Information contained in this presentation is for reference only and should in no way be considered as binding information on future concessions that may be auctioned. 3 4 Introduction // Governance of studies April, 2017 Project monitoring and decision making A contract was signed between the state of Amapá and BNDES , Monitoring of studies governing the Bank's remuneration and reimbursement of its expenses with third parties. Provision of Monitoring and Fieldwork and Delivery of information and management of information results validation of studies request June, 2017 assumptions Financial Engineering coordinator and Legal coordinator coordinator BNDES hired the PWC/ Egis/Loeser PMO Blanchet Hadad Advogados to structure the project to expand private participation in the state sanitation. CONSORTIUM 5 Project Overview 6 Project Overview // CAESA The Amapá Water and Sewage Company is a state mixed economy society founded in 1969 and linked to the Infrastructure Secretariat. Currently it serves all 16 cities in the state with basic sanitation services. POPULATION SERVED IN AMAPÁ ►Water: 289,541 inhab. ►Sewage: 59,258 inhab. TOTAL PERSONAL EQUIVALENT ► Total population: 829,494 inhab. ►414 people CONNECTIONS ►Water: 93,373 ►Sewage: 14,828 FINANCIAL DATA ►Total operating revenue: R$ 60.2 million NETWORK EXTENSION ►Realized investment: R$ 5.0 million ►Water: 1,074 km ►Sewage: 119 km Source: National Sanitation Information System (SNIS) - 2018 6 7 Project Overview // Proposed Business Model Arsap Regulatory Agency for Public Services Urban areas Private State of Cities Company Amapá ► The concessionaire provides the services of: • Water supply • Sewage collection and treatment • Commercial management with users ► Users remunerate the concessionaire by paying a tariff ► Arsap monitors contract performance and reports to the cities 7 8 Project Overview // Current Status and Universalization Goals The current universalization goals for urban areas in the State's municipalities are as follows: WATER 99% according to the deadlines below Year 4 Year 7 Year 8 Year 11 Itaubal Macapá Amapá, Oiapoque, Mazagão, Porto Grande, Tartarugalzinho, Pedra Branca, Cutias Municipalities Santana Laranjal do Jari Vitória do Jari, Calçoene, Ferreira Gomes, Serra do Navio e Pracuúba SEWAGE 90% according to the deadlines below Year 17 Year 18 Laranjal do Jari, Amapá, Oiapoque, Mazagão, Porto Grande, Tartarugalzinho, Pedra Municipalities Macapá e Santana Branca, Vitória do Jari, Calçoene, Ferreira Gomes, Cutias, Itaubal Serra do Navio e Pracuúba Source: 1SNIS 2018 9 Engineering Studies 10 Engineering Assumptions // Diagnosis of existing infrastructure Reports were prepared covering the headquarters, districts and rural areas of each city, containing basic information on the existing water supply and sewage systems Engineers 16 headquarters of cities Field visits and main districts Collection, ETAs, ETEs, Water and sewage Detailed reports reservoirs, EEEs, EEABs, infrastructure EEATs, networks Licensing, existing Documentation Additional information projects, works in progress, TACs ETA – Water treatment plant ETE – Sewage treatment plant 1 TAC – Conduct ajustment term 0 11 Engineering Assumptions // Diagnosis of existing infrastructure General information on water and sewage systems Existing systems General framework Technical information Specific data on the capacity of Capacities of facilities the main units and equipment Photo report Individual registration of the Condition of facilities main units and equipment 12 Engineering Assumptions // General Assumptions WATER SUPPLY SANITARY SEWAGE Consumption: 152 L/inhab/day (Macapá Return coefficient: 0.80 and Santana) and 135 L/inhab/day (other Current service rate: 5.8% Municipalities) Service-Goal Index: 90% Current service rate: 35.8% Infiltration rate: 0.5 L/s.km Service-Goal Index: 99% Current loss rate: 71.4% Projected losses: 30% in 9 years Hydrometering: 100% in 3 years and systematic replacement for an average useful life of 7 years 13 Engineering Assumptions // General Assumptions Capex assumptions - parametric budgets based on works with the same characteristics WATER SUPPLY SANITARY SEWER Reservoirs: concrete Compact and modular stations with UASB Reservation volume: 1/3 of the maximum anaerobic reactor, except for Macapá and daily consumption Santana ETA: same existing process Macapá: change in the treatment process, with the implantation of an upflow anaerobic Water pipeline: modified PVC reactor, maturation pond and drying beds Networks: replacement of 15% of existing Santana: UASB reactor followed by biological networks between years 2 and 4; average filter, secondary decanter and drying beds depth of 1.2 m Average net depth: 2.0 m HDPE booster line 14 Engineering Studies // Conceptual Design - Overview Besides technical premises, conceptual projects were based on preliminar studies and on the projection of population growth CAPACITY AND CONDITION Deficits of systems and works Size of demands OPERATING INSTALLATIONS required in existing systems Water and sewage EXPANSION OF Required Works for expanding infrastructure SYSTEMS systems GUIDELINES FOR CURRENT WATER: Up to 11 years Universalization goals SERVICE AND POPULATION SEWER: Up to 18 years Specific curves for each city 15 Engineering Studies // Conceptual Design - Overview Conceptual projects were elaborated for each city, establishing the prognosis for the universalization of water supply and sanitary sewage systems Surface collection ETAs PROJECTS Booster and Reservoirs Water supply pipelines Distribuition Wells network Collecting network EEEB Sanitary sewer PROJECTS Collectors and ETEs emissaries BUDGETS Capex Parametric based on similar works 16 Engineering Studies // Amapá - Population Population Growth 1.400.000 1,265 thousand 1.200.000 1.000.000 781 thousand 800.000 600.000 400.000 295 thousand 200.000 188 thousand 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Macapá Santana OutrosOther municipalities municípios EstadoAmapá State Source: IBGE. Population distributed in the municipalities based on the 2010 Census. 17 Engineering Assumptions // Capex Breakdown CAPEX breakdown WATER SEWAGE ► Surface Water Collection ► Sewage Treatment Station ► Raw Water Repression ► Sewage Pumping Station ► Raw Water Supply ► Sewer Collection Network ► Water Treatment Station ► Home Connections ► Treated Water Pumping Station ► Sewer Booster Line ► Treated Water Supply ► Sewage Outfall ► Reservoirs ► Acquisition of Areas ► Water Supply Network ► Projects ► Home Connections ► Loss Control ► Acquisition of Areas ► Macro and Micro Measurement ► Projects 18 Engineering Assumptions // Expansion of Networks and Connections Construction works – Water supply systems networks and connections (Amapá State) YEAR 1 2 3 4 5 6 7 8 9 10 11 NETWORK (km) 0 254 263 273 280 288 260 144 75 75 76 CONNECTIONS (un) 0 31.216 26.993 27.982 28.691 29.528 26.496 14.308 6.923 6.941 6.963 YEAR 12 13 14 15 16 17 18 19 20 Up to 35 TOTAL NETWORK (km) 41 40 39 39 38 38 37 36 36 435 2.767 CONNECTIONS (un) 4.119 4.058 4.000 3.938 3.875 3.813 3.747 3.678 3.605 44.096 284.971 Construction works – Sanitary sewage system networks and connections (Amapá State) YEAR 1 2 3 4 5 6 7 8 9 10 11 NETWORK (km) 0 71 126 171 234 254 287 189 194 166 170 CONNECTIONS (un) 0 9.273 12.813 17.750 24.266 26.435 29.169 18.740 19.225 16.927 17.309 YEAR 12 13 14 15 16 17 18 19 20 Up to 35 TOTAL NETWORK (km) 174 178 123 125 115 118 58 33 32 397 3.216 CONNECTIONS (un) 17.683 18.049 12.256 12.443 11.549 11.871 5.431 3.343 3.277 40.087 327.895 19 Engineering Assumptions // Expansion of Networks and Connections Construction works – Water supply systems networks and connections (Macapá) YEAR 1 2 3 4 5 6 7 8 9 10 11 NETWORK (km) - 163 168 174 179 185 190 93 27 26 26 CONNECTIONS (un) 0 19.602 17.957 18.554 19.139 19.712 20.273 9.892 2.837 2.790 2.746 YEAR 12 13 14 15 16 17 18 19 20 Up to 35 TOTAL NETWORK (km) 25 25 25 24 24 23 23 23 22 272 1.717 CONNECTIONS (un) 2.703 2.663 2.626 2.585 2.545 2.504 2.461 2.416 2.368 29.033 185.044 Construction works – Sanitary sewage system networks and connections (Macapá) YEAR 1 2 3 4 5 6 7 8 9 10 11 NETWORK (km) - 44 80 114 167 172 178 98 101 103 105 CONNECTIONS (un) 0 6.421 8.526 12.203 17.772 18.363 18.942 10.481 10.745 11.000 11.251 YEAR 12 13 14 15 16 17 18 19 20 Up to 35 TOTAL NETWORK (km) 108 110 66 67 68 69 21 21 20 248 1.959 CONNECTIONS (un) 11.496 11.737 7.048 7.145 7.240 7.332 2.237 2.196 2.153 26.393 210.683 20 Engineering Assumptions // Capex Projected investments – Water and sewage