Infrastructure Guarantee Fund

On 30/08/2012, Law 12,712 was enacted, authorizing, in Article 32 the Federal Government to participate as a shareholder to the limit of R$ 11 billion in the guarantee fund to cover risks related to infrastructure projects. Under Law 12,712, Articles 33 and 37, and Decree Law 7,976 of 01.04.2013, the creation of the Brazilian Guarantees Agency for (ABGF) was defined.

ABGF manages of the Infrastructure Guarantee Fund (FGIE) and represents it judicially and extra judicially. The FGIE, a fund established under private law, was created on 11/28/2014 via Extraordinary General Meeting, to guarantee, directly or indirectly, subject to the conditions and the forms provided in its Statutes, any risks, including non-manageable risks related to concessions, in the following operations:

I – large infrastructure projects in the Growth Acceleration Program (PAC) or strategic plans defined by the Executive Branch;

II – shipbuilding financing projects;

III – credit operations for the civil aircraft sector;

IV – projects resulting from public-private partnerships in the form of Law 11,079 of 30 December 2004, including those organized by States or the Federal District, subject to the provisions of Article 8;

V – other strategic programs linked to infrastructure operations defined by the Executive Branch;

VI – projects for total or partial construction of canal locks or other level crossing mechanisms.

In accordance with § 3 of Article 33 of Law No. 12,712/2012i, the Fund may only offer cover directly when the risks are not accepted, totally or partially, by insurance and reinsurance companies.

The Fund may also provide indirect cover, in a supplementary or complementary manner to insurance and reinsurance operations linked to the risks listed in § 2 of Article 33 of Law 12,712/2012, provided that the share of responsibility to be retained by insurers and reinsurers is not less than 20% (twenty percent) of the total responsibility of the operation.

Still under Article 35 of Law 12,712 and Article 2 of Decree No. 8,188 of 17/01/2014, the Council of Participation of Guarantee Funds for the Cover of Risks in Large Infrastructure Project Operations (CPFGIE) was created under the basic structure of the Ministry of Finance in order to guide the Federal Government’s participation in the Shareholders’ Meetings of the FGIE. It is composed of a representative and an alternate of the following agencies:

I – Ministry of Finance, as president;

II – Cabinet of President of the Republic; and

III – Ministry of Planning, Development and Management.

Currently, the FGIA is in the capitalization phase and modeling of guarantees for infrastructure projects.