Port of Itajaí Dredging Services at Risk Over Payment Delays

The Port of Itajaí, Santa Catarina, slated for a billion-dollar federal government concession, is mired in a severe crisis that has persisted for over a year. In recent days, a new development has heightened concerns within the industry: the threat of halting dredging services due to the port authority’s failure to make payments to the responsible company. Dredging is essential for maintaining the depth of the access channel and ensuring the passage of ships.

The city administration, currently owing approximately R$ 17 million to Van Oord, the service provider, is attempting to secure federal funding to settle both past and future bills. The company has notified the port that, if payment is not made by May, operations will be suspended.

This situation is worrying for importers, exporters, and terminal operators reliant on the port. The crisis could potentially affect Portonave, a private container terminal in Navegantes, which, although situated outside the port’s public area, shares the access channel.

“We are deeply concerned. The mouth of the Itajaí River is an area prone to siltation, requiring ongoing dredging. Therefore, any interruption would result in reduced operational capacity,” stated Osmari Castilho, CEO of Portonave. Beyond immediate concerns, Castilho emphasized the need to secure continued dredging beyond January 2025, when Van Oord’s contract expires.

The Port of Itajaí administration highlights that dredging is currently ongoing and is seeking federal assistance to ensure payment. A federal grant of up to R$ 50 million has been requested, but there is no definitive decision yet. When questioned, the Ministry of Ports and Airports stated that they “received the request, and it is under review.” However, insiders suggest that the federal contribution may be lower, necessitating the municipality to contribute part of the funds.

The dredging issue is just one of several turbulences faced by the port since late 2022. In December of that year, the contract with APM Terminals, a Maersk subsidiary controlling the port’s container terminal – Itajaí’s main operation – came to an end.

APM sought an early renewal, but the port authority opted for a simplified tender process to select a temporary operator. CTIL Logística emerged as the winner, but due to capacity-related queries from the National Waterway Transportation Agency (Antaq), the company did not assume control. Subsequently, the owners became subjects of a Federal Police operation on suspicion of international drug trafficking. Attempts to reach the company were unsuccessful.

A temporary solution was reached with APM for a six-month extension. However, in June 2023, the group decided against renewal, leaving the terminal idle since then.

According to the port administration, this hiatus is the main cause of the current dredging crisis, as income from the container terminal ceased.

In late 2023, Antaq initiated a new tender for a two-year temporary contract for the terminal, which faced further turbulence: the top bidder was disqualified, and after challenges, the second-placed Mada Araújo emerged victorious.

The company, unfamiliar with the industry, signed the contract in January this year and was given 180 days to commence cargo handling. However, doubts persist in the market regarding the company’s ability to deliver.

When approached, the group did not respond to the questions posed by the reporters.

According to Lito Guimarães, director of the Federation of Business Associations of Santa Catarina, a contingency plan is needed for the immediate resumption of container movement in Itajaí, should there be issues with the new company.

“We cannot wait for further tenders, which have lengthy maturation periods,” he asserted.

Since Itajaí’s operation halted, Guimarães noted that container terminals in Santa Catarina have been operating at maximum capacity. “The ports are overwhelmed due to space shortages, in a market representing the second-largest container movement in the country, currently experiencing a dire situation.”

However, a definitive solution will only come with the port’s new concession, expected to include the container terminal operation and access channel management – including dredging.

The project is open for public consultation until May, with the government aiming for an auction in the first quarter of 2025. It is estimated that the concession will attract investments of around R$ 2.9 billion.

Market expectations are that the bidding will attract interest. Ivam Jardim, partner at Agência Porto Consultoria, acknowledged the challenges of combining terminal operation and channel management in one contract. However, he noted that separating them would cause further delays as projects would need to pass through the Federal Court of Accounts again.

“I believe there will be interested parties, including companies associated with shipowners and operators like DP World, which has already expressed interest. However, we currently have the first version of the bid document; everyone will analyze it further.” Rafael Schwind, from Justen, Pereira, Oliveira e Talamini Advogados, anticipates competition in the auction. “It’s a well-located port; competition is likely.”

Source: Valor Econômico

Click here to read the original new report: https://valor.globo.com/empresas/noticia/2024/04/08/a-espera-de-concessao-porto-de-itajai-vive-crise.ghtml

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