Public-Private Partnership to Finance Deeper Draft at Babitonga Bay Access Channel

A groundbreaking partnership between the public and private sectors is being negotiated to finance the deepening of the Babitonga Bay access channel on the coast of Santa Catarina. This initiative involves the ports of São Francisco do Sul, managed by the Santa Catarina government, and Itapoá, a private terminal. They are discussing a unique financing model for the project, budgeted at R$ 300 million.

The proposed financial arrangement is unprecedented in Brazil. Porto Itapoá will finance the project using its own cash flow, while SCPar Porto de São Francisco do Sul, the local port authority, will execute the project. Porto Itapoá will ensure its earnings from access channel usage fees, plus interest.

The proposal has been presented to the federal government, which must authorize the procedures. On June 10, Governor Jorginho Mello met with the Minister of Ports and Airports, Silvio Costa Filho, to discuss the model. Further discussions took place on Monday (22/7) between representatives of the Santa Catarina government and the Ports Secretariat, but no final decision has been made yet.

Beto Martins, the state Secretary of Railways, Ports, and Airports, explained that all ships entering the Babitonga Bay access channel pay a usage fee, regardless of destination. This fee goes to a single fund managed by SCPar Porto de São Francisco do Sul. This fund will be used to repay Porto Itapoá under favorable terms.

“The State guarantees that this unfolding project will be repaid using the port’s own fees, within a period that does not compromise the maintenance of the public port, and at an interest rate well below market rates,” said Martins, noting that the cost to the government will be closer to international market rates and lower than those currently available in Brazil.

Viable Model

Cleverton Vieira, CEO of SCPar Porto de São Francisco do Sul, emphasized that under current conditions, the port authority cannot finance the project alone or secure financing from institutions like the National Bank of Economic and Social Development (BNDES). Hence, the importance of this public-private model.

The Port of São Francisco do Sul is the largest in Santa Catarina and the seventh largest in Brazil in terms of cargo throughput. This year, it handled 7.3 million tonnes from January to May, a 16% increase compared to the same period in 2023. In May alone, it saw 1.4 million tonnes, a 22% increase from the previous year, with soybeans leading the exports at 790,000 tonnes.

Porto Itapoá has major international logistics operators Maersk and Hamburg Süd among its shareholders. Specializing in containers, Porto Itapoá had the best first half of its history this year, with 597,338 TEUs (twenty-foot equivalent units), a 12% increase compared to the same period in 2023. Refrigerated cargo exports stood out with a 43% growth in the first six months of the year. In June, the port handled 109,889 TEUs, the best monthly result of the year.

Please refer to the chart below to find out which were the top most exported products in containers for the Port of Itapoá. The information below was gathered with the aid of DataLiner, a Datamar-powered maritime intelligence tool.

Itapoá Port Top Container Exports | 2024 | TEUs

Source: DataLiner (click here to request a demo)

Porto Itapoá views the improvements to the Babitonga Bay access channel as crucial for increasing its capacity. Currently, the port accommodates container ships up to 336 meters in length, but the goal is to operate with vessels of at least 366 meters with minimal tidal restrictions and adequate depth of the mooring channel.

“For the port to grow in terms of area and docking space, it needs proper access. Brazilian ports have lagged behind global demand in container shipping,” said Felipe Fioravanti Kaufmann, director of business development and customer experience at Porto Itapoá.

Kaufmann explained that the current phase involves a memorandum of understanding, with the aim of signing a contract between Itapoá and São Francisco do Sul. The expectation is that the official notice will be released later this year, with execution procedures starting in the first quarter of 2025. The project, estimated to take six to eight months to complete, aims to have the new conditions of the Babitonga Bay access channel operational by the fourth quarter of next year.

While there is no precise forecast for how long it will take for Porto Itapoá to recoup its investment, Kaufmann emphasized the partnership’s importance. “Public funding could have been awaited, but the state’s receptiveness to new models and our pressing demand made a public-private partnership the faster option,” he said.

Source: Globo Rural

Click here to read the original news report: https://globorural.globo.com/especiais/caminhos-da-safra/noticia/2024/07/sao-francisco-e-itapoa-negociam-parceria-para-ampliar-canal.ghtml

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