Brazilian Audit Court pushes for new attempt at bidding STS10 container terminal in Santos

A confidential report drafted at the dependencies of Brazil’s Federal Audit Court (TCU) recommends the court’s plenary session to order the Ministry of Ports and Airports to resume the bidding process for the STS10 container terminal at Santos Port. The report raises concerns that the ministry may have deliberately avoided privatization by delegating the terminal to the Port Authority of Santos (APS) to benefit private groups operating in Latin America’s largest port.

The TCU’s technicians estimate that the one-and-a-half-year delay in auctioning the port terminal has resulted in R$358.7 million in losses to the public treasury, a figure contested by both the ministry and the APS. The estimate was provided by Antaq (National Agency for Waterway Transport).

Minister Jhonatan de Jesus is overseeing the case, which has yet to undergo a plenary hearing session. The Presidency’s Chief of Staff is closely watching the process due to its potential political implications for the government.

The STS10 project, designed to handle containerized cargo, began in 2019 under then-Infrastructure Minister Tarcísio de Freitas. The auction, initially planned for 2022, would consolidate several expired contracts, including Ecoporto’s.

However, in the early days of President Lula’s administration, Márcio França, then-Minister of Ports and Airports, suspended the termination of Ecoporto’s contract, reflecting the government’s decision to halt the privatization of Santos Port.

In September 2023, França was replaced by Silvio Costa Filho, who, instead of extending Ecoporto’s contract again, signed an agreement with the APS, granting it full powers over contracts and even auctions. Since then, APS has extended the contract twice.

TCU technicians assert that the STS10 project has been redefined since then, primarily due to Ecoporto’s continued operation and plans to relocate the passenger terminal to the area.

As a result, the TCU report recommends replacing Ecoporto’s contract with a transitional one, valid for 180 days—deemed sufficient time to conduct the terminal’s auction.

The auditors also urge the resumption of the process within a month, citing a “procedural flaw.”

The auditors see potential irregularities and financial damages in both the delegation of powers to APS to decide on concessions and the extension of Ecoporto’s contract.

“The delays in implementing the STS10 project result in significant losses as growing demand is unmet, creating supply deficits that affect service levels and drive up contracted prices,” the technicians wrote in the report.

“Simulations show that any delay in capacity expansion will cause substantial supply deficits for meeting demand between 2026 and 2031.”

The report indicates that APS’s actions have been orchestrated to hinder the STS10 auction.

The Chief of Staff Office is divided on the issue. One faction believes it’s better to move forward with the auction, while another prefers to wait for the TCU’s decision, given the potential impact on the government’s support base in Congress.

Minister Silvio Costa Filho is a member of the Republicanos party, which the Lula administration relies on to steer Congress. APS President Anderson Pomini was appointed by Márcio França (PSB-SP).

Terminal Not the Only Option, Ministry Says

When consulted, the Ministry of Ports and Airports indicated that the situation has changed and that it is now uncertain whether a concession is the best solution for expanding the port’s capacity.

Nevertheless, the ministry has not ruled out the possibility of an auction and has requested until the end of December to present a final solution to the TCU.

Regarding specific points raised, the ministry stated that it would respond in the course of the legal proceedings.

In response to the TCU, the ministry’s National Secretary of Ports, Alex Sandro de Ávila, emphasized that the expansion of existing public and private terminals, such as DPW, BTP, and Santos Brasil, should also be adequately assessed. He argued that regardless of the decision, no financial damage to the public treasury is expected to be incurred.

“It is extremely important to note that preliminary analyses show there is synergy and similarity in outcomes among different solutions. In other words, whether we proceed with a new auction (STS10) or with the expansion of existing terminals, the results are similar,” Ávila wrote in an official letter.

“With a new asset through an auction or through the expansion of existing terminals, the increase in capacity will apparently be equivalent.”

He also informed the auditors that the existing capacity at Santos Port, combined with contracted expansions at the BTP and Santos Brasil terminals, will meet projected demand until 2034, with a growth projection of 3% per year.

The chart below uses DataLiner data to compare long-haul container imports and exports at the Port of Santos between January 2021 and June 2024.

Santos Container Movement | Jan 2021 – Jun 2024 | TEU

Source: DataLiner (click here to request a demo)

Port Authority Claims New Project Was Already Known

“It is surprising that a sudden and isolated statement from TCU is suggesting emergency public policies for the Santos Port, especially given that no such demands were voiced in the previous four years,” said APS President Anderson Pomini.

The APS emphasized that the port operates efficiently, being able to meet demands and that ongoing expansion projects and public and private investments ensure smooth cargo movement, including containers.

Pomini pointed out that APS, the municipality of Santos, and the state government of São Paulo are currently planning the construction of two overpasses and improvements to the access road system near the area proposed for STS10, which handles more than 4,600 trucks daily.

“If STS10 were implemented now, an additional 2,500 trucks would be added to local traffic each day, paralyzing Santos and the port itself,” he stated in a note.

In a letter to the TCU, Pomini informed that the court was already aware of the revised STS10 plan through a technical report sent in 2022—before APS took over full management of the port.

In consonance with the ministry, he also stated that STS10 is not the only alternative for increasing container capacity and argued that all scenarios for capacity expansion should be evaluated.

“Santos Port will not fail to meet container demand,” he wrote. “Existing capacity and contracted expansions will meet projected demand over the next decade.”

He also disputed the claim of financial damages over the year and a half since STS10 was included in the government’s concession plans.

“During most of this period, the court did not raise any concerns about the well-known suspension of the STS10 project, which was linked to the privatization process of Santos Port—a process that already showed clear signs of being unfeasible at the time,” he said.

Source: Folha de S. Paulo (Painel SA)

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