Port of Santos plans private partnerships, terminal expansion

After a year of slow motion, the Port of Santos is drawing up new expansion plans and intends to accelerate its growth projects, said Anderson Pomini, the president of the Santos Port Authority (APS). The state-owned company intends to launch two public-private partnerships (PPPs) by the end of 2024: one for the deepening of the access channel and the other for a tunnel connecting the cities of Santos and Guarujá.

The company has also officially ruled out the idea of a new container megaterminal, which had been dubbed STS 10. On the other hand, it is studying the expansion of the terminals of Brasil Terminal Portuário (BTP) and Santos Brasil by about 1.5 million TEUs (20-foot equivalent units of containers) through contract addendum, without the need for a tender, he said.

In office since April 2023, Mr. Pomini said he agrees with the port market’s criticism that the past year has been practically a waste of time in terms of progress for Santos. But he said the scenario is different in 2024. “This year, I have an obligation to enforce speed. To do that, I needed three things: the removal of the port from the privatization program, which slowed down the contracting; more funds; and the delegation of competencies [a measure that decentralized decisions on auctions and planning to the APS]. All three have been resolved.”

One of the main demands of the port operators is the deepening of the port’s access channel to 17 meters from 14.5 meters, which would allow larger ships to pass through. According to Mr. Pomini, the tender for the works to deepen the channel to 16 meters is expected to be published in the first half of the year.

The deepening to 17 meters would be done through a PPP. “We are studying with the BNDES [Brazilian Development Bank] a concession for dredging and other related services, for 25 or 30 years.” The funds for the project would be the same as what APS already spends on dredging today. “The annual maintenance budget is R$300 million.”

Another PPP that the port authority plans to launch this year is the Santos-Guarujá tunnel, a project included by the federal government in the Lula administration’s New Growth Acceleration Program (PAC) and whose leadership has been disputed with the São Paulo government. According to Mr. Pomini, the idea is to use APS’s cash, which currently stands at around R$2.9 billion, to pay for up to 50% of the tunnel’s construction—as of the third quarter, cash reserves totaled R$2.3 billion. There would be no consideration over the course of the contract, he said. “The 50% could go down, depending on the modeling that is done and the competition.”

The federal government could split the contribution to the construction of the tunnel with the state, but Mr. Pomini said the federal government has taken on the entire amount because the state’s contribution would be financed by BNDES. “If it’s going to be 100% federal funds, we’ll do it through the federal government.”

When contacted, the state government said it has “financial and fundraising availability” for the project and that the amount was not included in this year’s annual budget law because the work would not begin until 2024. The government also said that “the only existing executive project for the tunnel” was carried out by the state and is being updated.

In addition to the PPPs, the port authority is planning a new route to expand the port’s container terminals. Mr. Pomini has decided to put an end to the STS 10 project, which would be a megaterminal in the city of Santos, which would have had an annual capacity of 2.3 million TEUs.

Instead, APS is proposing to expand the terminals of BTP (controlled by Maersk and MSC) and Santos Brasil, annexing adjacent areas, which would be done by means of a contract addendum, without the need for a tender, he said. Together, the two expansions would add 1.5 million TEU of capacity per year.

In the case of BTP, the idea is to incorporate part of the area that would be included in the STS 10. “We can classify it as a non-tenderable area. For example, if there’s a public pier and a port back-up area used by BTP, I can avoid a bidding process because it’s in the public interest for BTP to increase its capacity and for a public pier to be implemented. There are legal instruments that allow merger without a bidding process.”

In the case of Santos Brasil, the annexed area must be cleared because it is currently occupied by precarious housing. “It’s an easier case because it’s a non-bidding area. We’ll remove the houses on stilts, and in return the company will invest in the construction of these houses.”

The chart below provides a comparison between container exports and imports through the Port of Santos between January 2019 and November 2023. The data provided below is from the DataLiner data service.

Exports & Imports at Santos Port | Jan 2019 – Nov 2023 | TEU

Source: DataLiner (click here to request a demo)

Despite Mr. Pomini’s plans, sources in the sector say that neither group has been formally approached and that there has been no concrete proposal. They also say that there is interest in expanding capacity, but everything depends on the terms of the counterparts. One source also points out that the companies already have investments underway as a result of early contract renewals—Santos Brasil’s was signed in 2015 and BTP’s in 2023.

When contacted, BTP said that it “believes it is essential to increase the capacity of the Port of Santos” and that it is “closely following all the projects and ideas that are being developed.” Santos Brasil said it is “available to collaborate in projects to develop the container sector in the port.”

Another APS plan to expand capacity would be to build a new container terminal on the island of Bagres. However, Mr. Pomini said this is not a short-term project. It would still be necessary to make changes in the public area of the port to include the land.

In addition to containers, Mr. Pomini said there are plans for new projects in Santos, and the priority is liquid bulk—at the end of 2023, APS issued a call for interested parties to operate the STS 08 terminal. “The big demand is to increase the liquid bulk area. Then comes sugar and containers.”

Source: Valor International

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