GMB - You've been at the forefront of this LOTEX process for a long time, practically from the beginning. How do you feel now it is over and what do you believe is the biggest victory for the country as a result?
Alexandre Manoel - The office I am in charge of is the defense of competition. When I was undersecretary, Iwas in the tax and lottery business as both regulator and defending competition. So, when faced with a monopoly, as in the case of Caixa, it was my duty as a civil servant to seek to open the market, generate competition so that it could develop. We have the feeling that we must be fulfilled because we were able to participate in breaking the monopoly with a project that was born there in the ministry, and that everyone knows changed completely because it was the privatization of a subsidiary company and we changed to a concession. The incumbent monopoly subsidiary company continued to participate, which did not mean a break in monopoly, so we switched to a concession where the private will operate 100% at its peril, generating more opportunities and will make the competitor himself also strive to improve. So it is a duty to be fulfilled in the sense that I have done what must be done in relation of opening the market and generating competition.
Under the business plan, LOTEX's revenue tax collection is expected to reach R$ 15 billion (U$S 3.7bn) in five years. Do you think the winning consortium will be able to reach this easily?
My expectation for what I know about how they operate in other countries is very high, because here we do not know about lottery operation to a degree as it is done in developed countries, with private interest and all. If they operate as they do abroad, the expectation is very good that their revenues will grow at a very good intensity. It would be inconsequential if I were to say anything, we have to be guided by the BNDES business plan and it says it's 15 billion (US$ 3.7bn) over five years; so, we have to base on that.
Much has been said about a price decrease during the LOTEX process. Has there really been a change regarding this topic?
There was no price drop during the process as has been reiterated several times. The business plan was maintained, the premises as well. Actually, what happened was the change of term where you have the price decrease, but the price is equivalent and there was the installment thing, but keeping the present value, the real value equal. That is the same question: If you are going to buy a commodity in eight installment, you will not pay the same price you would pay in cash. But if you bill in times is the same amount you will be paying the cash.
Another theme much talked about was the presence of only one competitor in the auction. What is your view on this criticism of the LOTEX process?
I particularly think this is a criticism that doesn't fit. The grant, in the case of the instant lottery, is just a sign of business. It is a sign that we needed to say that the bidder is really committed to the business. Just that, but from a business standpoint, success is in having you attracted the best. The most important thing of the deal is not in the grant, but in how much it will generate throughout the process, and will be 16.7% of its revenue, not to mention how much it will pay in income tax, ICSLL and so on. So, the more it invoices, the more this 16.7% of revenues will represent.
Does the government have any compensation plans prepared, for itself and the winners, in case the stated goals are not met?
From the government's point of view it is their risk, but as modeling incentives are aligned, they are in every position to seek more and more revenue. As they do so worldwide, why not here in a relatively virgin market, a greenfield, and where the direct competitor generates a per capita revenue of 96th, 97th place. They have everything to come and do a good business for them, the government and society.
Source: Exclusive Games Magazine Brasil
