IDB Invest financing will allow for the expansion and improvement of approximately 371 kilometers of state highway, connecting metropolitan Belo Horizonte to the municipality of São Sebastião do Paraíso at the border with the state of São Paulo (the “Project”). The highway network cuts directly through 22 municipalities in Minas Gerais and influences 50 cities, home to 1.3 million inhabitants (i.e., 7.4% of the state’s population). It is estimated that 7.7% of Minas Gerais’ GDP (Gross Domestic Product) is concentrated in the MG-050 system catchment area.
The investment program, during the 25 years of the concession period, consists in the expansion and improvement of the existing highway, including 82.3 km of highway shoulder improvements 52.9 kilometers of new roads, 114 kilometers of third lane expansions, and construction of 17 interchanges, 12 bridges, viaducts and other structural works, as well as nine pedestrian overpasses or underpasses. IDB Invest will finance the investments executed from mid-2017 to 2022, improving road conditions and increasing user safety.
Project cost is R$1.3 billion, which will be financed by IDB Invest through a long-term loan in an amount not to exceed R$400 million with a term of up to 12 years; capital contribution and cash from operations of R$567 million and debentures of R$310 million.
The due diligence evaluation by IDB Invest covered procedures and documentation related to social and environmental management of the project, as well as an analysis of gaps vis a vis IDB Invest’s Sustainability Policy requirements. The analysis involved extensive verification of documents and interviews over the phone and in person with teams responsible for aspects of environment, health and safety, human resources, community relations, land acquisition, administrative control and security of property, as well as “engineering” (construction and operations) by Concessionária da Rodovia MG-050 S.A. (“Nascentes das Gerais”). A field visit was made from 11th to 15th of February 2019 during which meetings were held at the parent company AB Concessões S.A. in São Paulo. Other meetings were held at the headquarters of the Nascentes das Gerais company (“Nascentes” or “Client”) in Divinópolis (MG). These were followed by visits to portions of the concession territory and construction sites situated between Divinópolis and Ribeirão Preto (SP). Meetings were held with the environmental licensing authority (Regional Authority on the Environment of the Upper São Francisco River – SUPRAM ASF), and with the agency that manages the Serra da Canastra National Park Nature Reserve (Chico Mendes Institute for Biodiversity Conservation - ICMBIO) and the non-profit World Childhood Foundation.
Corrective measures were developed in order to complete compliance with IDB Invest’s requirements. These actions will be carried out in designated time frames and are summed up in the Environmental and Social Action Plan - ESAP presented at the end of this document and to be agreed on mutually with Client.