Brazil’s government may consider extending the Port of Santos concession period

Upon returning from a trip to New York, the Minister of Infrastructure, Marcelo Sampaio, brought with him a new suggestion for the privatization of the Port of Santos: the extension of the concession period of the Santos Port Authority (SPA) from 35 to 50 years. Businesspeople made such a suggestion during roadshows in the United States, and the government has yet to look into them. Nonetheless, industry experts have begun to get concerned.

Sampaio mentioned the possibility of extending the contract term in an interview with the news outlet Folha de S.Paulo. According to the minister, international investors are concerned that the current term is insufficient for the compensation provided in the concession. “One of the recommendations given in the public consultation phase was to prolong the length of the concession contract,” the ministry stated in a note to A Tribuna.

According to the ministry, the remarks on the Santos Port Authority’s privatization process are at the “final analysis stage, as are the projections of the impacts of the approved suggestions.” According to ministry officials and the National Waterway Transportation Agency (Antaq), the contributions will be presented to the Federal Court of Accounts as soon as they are studied.

For the director-president of the National Federation of Port Operators (Fenop), Sérgio Aquino, the Federal Government demonstrates caution by saying that it will evaluate the proposal. However, he reveals concern about the possible extension of the term. He believes that the basis of the process should follow along with the privatization of Companhia Docas do Espírito Santo (Codesa), auctioned in March for 35 years.

“The ideal situation would be to wait for the implementation and operation of this system in the Port of Vitória, which has already gone through the bidding procedure, and see how things proceed for necessary corrections. In a preliminary, inconclusive analysis, I believe that not lengthening the period would be optimal.”

However, Aquino assures that the government’s investigation of the subject is necessary, given the investors’ concerns about timeliness. “According to the papers and opinions released, the current term is sufficient in terms of appeal. In-depth investigations will now provide the solution to that.”

See below the track record of Brazilian exports of containerized cargo via the Port of Santos from January 2021 to March 2022. These data are from Datamar’s DataLiner.

Containerized Cargo at the Port of Santos | Jan 2021 – Mar 2022 | TEUS

Source: DataLiner (click here to request a demo)

Port consultant Fabrizio Pierdomenico from Agência Porto Consultoria agrees with Aquino regarding the risk of changing the Port of Santos concession period in a model that has not yet been implemented in the country. “Especially since one of the objections raised at the Australian model, which inspired and served as the foundation for the privatization of the Brazilian Port Authority, was that the concessions had long periods.”

Ivam Jardim, a port consultant, warms that reforming port legislation would be required because Brazil lacks a law for concessions lasting more than 50 years. “Currently, the period stipulated by law is 35 years, with subsequent extensions up to 70 years. The legislation would have to change. I don’t think it’ll be simple, especially since they want to complete the process this year, and time is limited.”

According to the federal government, the Port Authority of Santos is expected to be auctioned in the second part of the year. According to Jardim, at the end of the 35 years, the concessionaire will be free to propose additional investments, and, as a result, the concession could be extended for another 70 years. “There are 100-year concessions all over the world, but 35 years is adequate for our Brazilian culture and this model.”

Source: A Tribuna

To read the full original article, please go to:

https://www.atribuna.com.br/noticias/portomar/governo-federal-estuda-ampliar-prazo-de-concessao-do-porto-de-santos

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