IDB approves innovative two-phase US$128.9 financing for São Paulo Metro Line 4 project in Brazil

First public-private partnership launched by State of São Paulo

Washington, United States of America – The Inter-American Development Bank announced 2008-05-23 the approval of an innovative two-phase US$128.9 million financing to Concessionária da Linha 4 do Metrô de São Paulo S.A. (ViaQuatro) to support the first Public-Private Partnership (PPP) program to be launched by the State of São Paulo, Brazil.

Line 4 will cross metropolitan São Paulo in a southwest-northeast direction, connecting large business centers such as the Centro Histórico and Avenida Paulista to more residential areas throughout the corridor. The project will have a host of positive economic development and environmental impacts.

The new line will add approximately 21 percent in additional capacity to the metro system and the benefits of the project are expected to be shared broadly across low, medium and higher income populations. Line 4 will be the line with the largest number of interconnections with other metropolitan and regional transportation routes, so the project is expected to have a significant impact on overall connectivity for the citizens of São Paulo. In addition, the project will mitigate congestion, which will have impacts on both travel times as well as air quality and noise levels.

The PPP concession was structured such that the public sector is responsible for the construction of the civil infrastructure works, while the supply of rolling stock and systems as well as operation and maintenance will be performed by ViaQuatro pursuant to a 30+ -year concession agreement with the State of São Paulo.

In more specific terms, the IDB financing will include a direct A Loan divided into two phases for a total of US$128.9 million from the Bank’s ordinary capital. This direct A Loan financing will be accompanied by a phase I syndicated B loan for approximately US$213.2 million, consisting of resources from financial institutions that subscribe participation agreements with the IDB, as well as a future B loan for phase II whose amount will be finalized once the investment program for phase II is defined by the state under the terms and conditions of the concession.

“The project will expand high-quality public transportation for approximately 1 million users daily once the system is fully complete, representing a significant enhancement in travel time savings, cost reductions on items such as gas and parking and an overall quality of life enhancement due to expanded accessibility,” according to John Graham, IDB project team leader.

The borrower, ViaQuatro, is a private sector sociedade anônima established under the laws of Brazil for the sole purpose of the execution of the concession contract. The sponsors of the project are Companhia de Concessões Rodoviárias (CCR) of Brazil, Montgomery Participações S.A. of Brazil and Mitsui & Co., Ltd. of Japan.

Additional background information (provided by Infrasite’s Editorial Staff)
ViaQuatro and Siemens-Rotem announce a partnership to supply trains for Line 4 of São Paulo’s subway system