Port auctions to draw R$12bn investments in 2024

The National Water Transportation Agency (ANTAQ) plans to hold 19 port auctions this year, with expected R$11.7 billion in investments, director Eduardo Nery told Valor. The projects include 16 concessions by the federal government, totaling R$8.2 billion, and 3 projects in Paranaguá (Paraná, where administration is decentralized), with another R$3.5 billion in investments.

Until 2026, the Ministry of Ports and Airports expects to hold 35 auctions, attracting R$14.5 billion in investments.

In March, scheduled auctions include four terminals for rice, fertilizer, soybeans, corn, and malt in the port of Recife (Pernambuco), with expected R$59.8 million, and a container terminal in the port of Santos (São Paulo), the STS33, with R$36.7 million in investments.

The main auctions should be held in August, according to ANTAQ. The most awaited projects are the mineral dry bulk terminal in Itaguaí (Rio de Janeiro), with R$2.73 billion; the Itajaí (Santa Catarina) port, with R$2.87 billion in investments; and the Paranaguá (Paraná) access channel, with more than R$1 billion in investments.

The Paranaguá auction is expected to attract attention, because it should be a reference for other concessions within this model, in which the services include providing maintenance and deepening dredging of the access to vessels. “These are very important investments for deepening and providing maintenance of the access to the port, to enable larger vessels to pass,” Mr. Nery said.

“The Paranaguá project will be the ground zero for others, such as those at the Port of Santos and the Port of Rio Grande. It is something new. Dredging companies are expected to lead [the auctions], since they have expertise in the area, but consortiums may be formed,” said Jesualdo Silva, president of the Brazilian Association of Port Terminals (ABTP).

The Itajaí auction is also highly anticipated not only due to its size, but also for the upheaval it caused last year. After the APM Terminals (Maersk) contract expired, at the end of 2022, activities in the port were virtually halted for a year amid disputes around the transition agreement.

“It’s a typical container terminal, but it has been idle for a while, which posts a problem,” said Rafael Schiwind, a partner at Justen, Pereira, Oliveira & Talamini Advogados.

In the previous administration, the idea was to privatize the port of Itajaí. The new project replacing the original one includes almost the entire port operation, with the container terminal and the access channel —the modeling has not yet been completely decided, but it is moving in that direction.

For Thiago Miller, a partner at Ruy de Mello Miller Advogados, the combination could reduce market interest in the project. “Although it may seem smart to combine the terminal and dredging, that may end up reducing attractiveness. But expectations are high,” he points out.

Although ANTAQ expects to hold both auctions in August, the market is concerned about whether there will be enough time. According to the Ministry of Ports’ schedule, the two auctions (Itajaí port and Paranaguá channel) should take place in 2025.

Grain terminal auctions are also expected for this year, said Marcos Pinto, a partner at A&M (Alvarez & Marsal) Infra. At least two large projects in Paranaguá and one in Vila do Conde could be launched this year. “These are projects that could attract interest, as long as they are well structured. There is demand for Paranaguá. However, the high investment requirement may cause some issues, in a market that can be oversupplied if all the bids are confirmed. There is also demand for Vila do Conde, although there are many private terminals nearby. There is interest; it all will depend on the model chosen,” he points out.

The sector has experienced a series of auctions in recent years, despite the change in administration. “For ports, the schedule has been maintained. It can be explained in part by the fact that many contracts that were signed shortly after the Ports Act [from 1993] for updating the sector are expiring and being tendered again. Another point is that many terminals are vertically linked to the production chain. In many cases, there is continuity. For those who depend on the terminal, it is a matter of life or death, and there are not many others interested,” Mr. Schiwind said.

On the other hand, analysts note that most of contracts tendered in 2023 involved smaller terminals, while larger projects have been moving slowly. During the year, 10 terminals were auctioned, totaling R$1.5 billion in investments—of this total, only one project, the grain terminal PAR 09 in Paranaguá, accounted for R$910 million.

Among the reasons cited for the delay in large projects were changes in management. In 2023, the federal government was slow in choosing names for roles. Then, Silvio Costa Filho replaced Márcio França as minister of Ports. Mr. Costa Filho declined to comment.

Source: Valor International; translation by Liliana Hage

To read the original news article, please see: https://valorinternational.globo.com/business/news/2024/02/14/port-auctions-to-draw-r12bn-investments-in-2024.ghtml

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