BRASILIA, Brazil --- The Senate in plenary session yesterday (Wednesday) approved, in a symbolic vote, two draft resolutions that authorize the Union of Brazil to obtain foreign loans amounting to 6.088 billion euros (BRL 17.0 billion), of which 4.324 billion euros (about BRL 12.1 billion) to build the first Brazilian nuclear-powered submarine as well as four conventional submarines, and 1.847 billion euros (about BRL 5.1 billion) for the production of 50 Eurocopter EC-725 transport helicopters.
These systems will be produced in Brazil, with technology transfers, as set out in the strategic partnership agreement signed in December 2008 by the President of Brazil, Luiz Inácio Lula da Silva, and French President Nicolas Sarkozy. "These are key strategic projects for Brazilian defense and for the development of our industry", said Defense Minister Nelson Jobim. The draft resolutions approved on the evening of Wednesday have been enacted by the Senate President José Sarney.
The Submarine Development Program (Prosub) will cost a total of 6.790 billion euros (about BRL 19.0 billion), of which 4.324 billion euros (about BRL 12.1 billion) will be financed through the loans and 2.466 billion euros (BRL 6.9 billion) will be paid directly with funds from the Treasury.
Of this total envelope, 1.868 billion euros will be dedicated to the construction of the naval base and shipyard in Itaguai (Rio de Janeiro state). The loan to finance the submarines will be repaid by Brazil over 20 years (2010 to 2029) to a consortium of banks including BNP Paribas SA, Societe Generale, Calyon SA, Credit Industriel et Commercial, Natixis and Santander. The banks will disburse the funds to pay suppliers over 15 years, from 2010 to 2024.
The agreement with France provides for the project design and construction -- with transfer of technology -- of four conventional submarines, and of the non-nuclear part of one nuclear submarine; and of the shipyard and naval base for the construction and operation of the nuclear-powered submarine. More than 30 Brazilian companies will receive technology to produce about 35 thousand parts and items of the submarine.
The second loan is for the licence-manufacture of 50 Eurocopter EC-725 transport helicopters (Project HX BR). They will be built by the company's factory Helibrás in Itajubá (Mato Grosso state), and production will also benefit several companies to become suppliers. "Another advantage is that it was agreed with France that any export of helicopters to South America and Africa will be made by the Brazilian factory," said Minister Jobim.
This project will cost 1.847 billion euros (about BRL 5.1 billion), of which 1.764 billion euros (about BRL 4.9 billion) will be financed by the French side over nine years, and 83 million euros (BRL 232 million) will be disbursed by the Brazilian Treasury. The loan will be made by the following banks: Societe Generale, BNP Paribas SA, Calyon SA and Santander.
Each service -- navy, army and air force, will receive 16 helicopters to support their missions. Two more helicopters will be allocated to the Air Force to transport authorities.
PROSUB: In the case of submarines, the agreement with France stipulates that Brazil will receive only non-nuclear technologies relative to nuclear-powered submarine. Brazil has its own core nuclear technology, developed by the Navy over 30 years through Project Aramar. The construction of the submarine's nuclear reactor will be funded by the National Treasury and its development will also provide for the installation of small power plants for generating electricity.
The design of the nuclear submarine will be based on the French Scorpene model, adapted to Brazilian needs. France will transfer the technology necessary for its design and construction (Brazil today has only part of the construction technology). Technology for the design and construction of the shipyard and of the naval base, which must be suitable for a nuclear submarine, will also be transferred.
Due to technical and environmental requirements, the current sites and submarine base, located in the densely populated capital of Rio, cannot accommodate submarines with a nuclear reactor.
These facilities will be built by a Special Purpose Company (SPC), comprised of Brazil's Odebrecht (with 50% shareholding), France's DCNS (49%) and the Brazilian Navy (1%). The Union of Brazil, through its navy, will have a “golden share” in the SPC with veto rights.
The Brazilian construction company Odebrecht was chosen freely by the French company DCNS, without government interference. The only demand made by Brazil was that the work was played by a national builder, with the technology passed on by France.
Prosub: Schedule and financial disbursements to suppliers
(N.B.: BRL = Brazilian real; worth approx. 0.53 US dollars)
2009 - Disbursement: BRL 2.108 billion (€ 753 million) by Brazilian Treasury
2010 - Start of construction of the shipyard and Naval Base (until 2014)
Project Design of conventional submarines
Disbursement: BRL 2.314 billion (€ 826 million)
2011 - Start of construction of conventional submarine n°1 (delivery in 2014)
Home design nuclear-powered submarine (on the project until 2014)
Disbursement: BRL 2.165 billion (€ 773 million)
2012 - Disbursement: BRL 2.333 billion (€ 833 million)
2013 - Start of construction of conventional submarine n° 2 (delivery in 2017)
Disbursement: BRL 2.315 billion (€ 827 million)
2014 - Delivery of the shipyard and Naval Base
Disbursement: BRL 1.769 billion (€ 632 million)
2015 - Delivery of the conventional submarine n° 1
Completion of the nuclear powered submarine project design
Start of construction of submarine’s nuclear propulsion reactor (for 2020 delivery)
Start of construction of the conventional submarine n° 3 (delivery in 2019)
Disbursement: BRL 982 million (€ 351 million)
2016 - Start of construction of nuclear-powered submarine (for 2018 delivery)
Disbursement: BRL 905 million (€ 323 million)
2017 - Delivery conventional submarine n° 2
Start of construction of conventional submarine n° 4 (delivery in 2021)
Disbursement: BRL 832 million (€ 297 million)
2018 - Disbursement: BRL 783 million (€ 280 million)
2019 - Delivery of conventional submarine n° 3
Disbursement: BRL 665 million (€ 238 million)
2020 - Completion of construction of nuclear propulsion system
Disbursement: BRL 555 million (€ 198 million)
2021 - Delivery of the 4th and final conventional submarine
Delivery of the nuclear-powered submarine
Disbursement: BRL 440 million (€ 157 million)
2022 - Disbursement: BRL 189 million (€ 67 million)
2023 - Disbursement: BRL 125 million (€ 45 million)
2024 - Final Disbursement: BRL 254 million (€ 91 million)
Total: BRL 18.733 billion (€ 6.691 billion); Treasury payments will continue until 2029.
Project HX BR (EC-725 helicopters from Eurocopter)
2009 - Disbursement: € 83,333,333.00; helicopters delivered: 0
2010 - Disbursement: € 258,295,595.95 helicopters delivered: 3
2011 - Disbursement: € 70,341,804.66; helicopters delivered: 1
2012 - Disbursement: € 367,671,383.17; helicopters delivered: 4
2013 - Disbursement: € 322,791,190.31; helicopters delivered: 11
2014 - Disbursement: € 314,066,364.61; helicopters delivered: 9
2015 - Disbursement: € 222,870,890.10; helicopters delivered: 14
2016 - Disbursement: € 145,007,505.22; helicopters delivered: 8
2017 - Disbursement: € 62,976,049.98; helicopters delivered: 0
TOTAL-Disbursement: € 1,847,354,117.00; helicopters delivered: 50