Elect governor of Sao Paulo goes to Lula in bet to privatize Port of Santos

The governor-elect of São Paulo, Tarcísio de Freitas, will try to have a direct conversation with the president-elect Luiz Inácio Lula da Silva and the future Minister of Ports, Márcio França, to try to convince the new federal administration to move forward with the auction of the Port of Santos, the largest in Latin America.

Shortly after being appointed minister by Lula, Márcio França stated that the port of Santos would no longer be granted to the private sector. He said that the decision had already been made and that the new government would keep the current structure of the port authority.

The Santos privatization plan was set to conclude in the coming months and become the second-largest concession agreement granted by the Bolsonaro administration after Eletrobras. The Federal Court of Auditors has analyzed the proposal.

This will likely be one of the first commitments Tarcísio intends to fulfill at the beginning of his term, to try to move forward with the process of privatizing the port, the entry and exit route for 29% of all commercial transactions in Brazil.

Questioned, França was adamant. “The auction will not be held. The port authority will continue to be run by the government. We will grant concessions for areas within the port, such as private terminals. We respect what has already been done. Now, some situations have not been ratified and will be scrutinized by the new government’s technical experts,” the future minister stated. “We don’t have problems with having private concessions, but we need some controls. We need to go over this again. We requested that everything be postponed so the president could express his thoughts.”

Within the São Paulo government, the hope is to reverse França’s position with dialogue. According to interlocutors, Tarcísio de Freitas, who was once Minister of Infrastructure, believes that, by going deeper into the matter, the Workers Party (PT) government will rest convinced that, as with roads and airports, the privatization of the Port of Santos management is the way to secure the investments needed for the expansion of a structure that has currently hit its limits.

See below the record of container exports by the Port of Santos compared with imports from January 2019 to October 2022, according to the market intelligence service DataLiner.

Exports and Imports – Port of Santos | Jan 2019 – Oct 2022 | TEU

Source: DataLiner (click here to request a demo)

Tarcísio has given signals that he will seek to establish a partnership with the Lula government and that his administration and the federal administration “are partners and want São Paulo to grow, for the good of all.” When contacted, Tarcísio de Freitas declined to comment.

This issue is of such relevance to the new head of the government of São Paulo that, according to the Estadão press office, he has already contacted the president of the PSD party, Gilberto Kassab, who will occupy the position of Secretary of Government of the State of São Paulo, requesting his participating in the upcoming conversations with the future federal government.

França said, on the 22nd, that the new government is not against private concessions but that each port will demand a specific strategy from 2023 onwards. Ports and air transport are strategic issues for the country. It doesn’t seem like it makes much sense for us to compete with other state-owned companies from other countries,” he said. “The government has no problem making concessions in public areas, but the authority it retains must remain public.”

The concession process for the Port of Santos was advanced, and Tarcisio de Freitas had attempted to hold the auction later this year since last year, but various stages of the process took more time than expected. The draft of the call for bids is now at the Federal Court of Accounts (TCU), the final step needed to set the auction date.

What is at stake is an auction that required investments of R$ 18.5 billion in improvement, expansion, and maintenance projects. Another BRL 2.9 billion would be set aside to construct an underwater tunnel between Santos and Guarujá. Under the current plan, the current port manager, the state-owned Santos Port Authority (SPA, formerly Codesp), would be fully privatized. This is what the PT administration does not want.

Increasing the complex’s capacity drove the port privatization plan forward. According to the national logistics expansion plan, Brazil will need to invest around BRL 75 billion annually until 2035 to meet the country’s needs in the entire transportation sector. However, the Union has approximately R$ 6.5 billion for the federal logistics sector this year.

According to Edeon Vaz, executive director of Pro-Logstics Movement, which specializes in agribusiness routes, if the PT government maintains the position to call off the auction, it will have to present a solution to the current structure’s problems. “Concession companies and private terminals are already present in the Port of Santos. If the port management concession is not the solution, it will be necessary to find another way to ensure the continued expansion of a structure that cannot be stopped and is one of the most important in the world,” he said. “It is a critical route for agribusiness and other sectors in the country, and its continued growth depends on it.”

São Paulo government wants Santos-Guarujá tunnel

The São Paulo government is unwilling to give up one of the most emblematic points included in the privatization process of the Port of Santos, which is now suspended: the underwater tunnel that would connect the cities of Santos and Guarujá.

Today, this connection is made by 43 kilometers of road. Another option is to cross the sea by ferry. The underwater tunnel will be only 1.7 kilometers long.

The value of this work is estimated to be R$ 2.9 billion, and it was included as one of the auction requirements. When finished, the structure will be used by approximately 40,000 people daily.

The Estadão press office determined that if no agreement is reached with the federal government, the Sao Paulo government wants to run the project alone by using public resources and establishing partnerships with other parties.

Source: O Estado de S. Paulo

To read the full original article, please visit: https://www.estadao.com.br/economia/tarcisio-freitas-porto-santos-sp-leilao/

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