Questions Raised Over Santos Port’s Approach to Fuel Terminal Concession

The new concession of a fuel terminal at the Port of Santos, known as STS 08, has sparked controversy and raised questions within the industry. The Port Authority of Santos (APS) initiated a public call in the final days of 2023, a simplified selection process, to identify potential operators for the terminal. Petrobras has criticized the process, aiming to negotiate the area’s incorporation without competition. Conversely, both companies and industry analysts have questioned APS’s decision to opt for a public call instead of a regular bidding process. The contract spans 25 years, with the possibility of extension up to 70 years, and is estimated to generate revenues of R$2.8 billion.

The public call, intended to gauge interest, would only lead to a contract if a single proposal were received, thereby bypassing an auction. However, since there are multiple interested parties, APS indicates that a formal bidding process will likely be required.

This approach has raised concerns among some companies and industry analysts. The call was issued on December 26, initially allowing a 30-day window for expressions of interest. A group represented by the law firm Demarest went to the courts to challenge the process, using the short period slated for analysis, interruptions caused by the holiday season, and the project’s complexity as arguments. Despite the objections, APS initially denied the request. Petrobras also attempted to challenge the public call on similar grounds but was unsuccessful. It was only after Petrobras filed a writ of mandamus that the deadline was extended to March 5.

APS still supports the procedure, lauding its innovative nature and adherence to legal provisions. The company asserts that the public call effectively gauged market interest in the fuel terminal in Santos. APS notes that if there were no interested parties, they would explore alternative options, including consolidation with Petrobras’ neighboring terminal. However, with demonstrated interest, APS plans to proceed with the auction, emphasizing that the public call was positively received.

A law enacted in 2020 allows for the award of a contract without bidding if only one interested party is identified following an unsuccessful auction attempt. This scenario occurred with STS 08 after an unsuccessful auction in 2021. While Petrobras secured the neighboring terminal, STS 08A, they did not bid for STS 08.

Sources familiar with the matter, speaking anonymously, acknowledge that while the public call is not illegal, it represents a novel and seldom-used process, raising concerns about its suitability for a project of this scale and complexity.

In addition to procedural concerns, there are apprehensions regarding potential legal uncertainties stemming from the public call. Four requests to challenge the call were lodged, including one from Petrobras and three from groups represented by legal counsel. Critics have also voiced operational concerns, particularly regarding mooring regulations at berths linked to the terminal.

Before the 2021 auction, Petrobras operated both STS 08 and STS 08A under successive temporary contracts, which were interrupted by tender processes, ultimately dividing the terminal into two separate entities.

Industry insiders note differences between the current situation and that of 2021, including reduced financial obligations outlined in the new notice. Lease payments to the port authority have decreased from R$1.5 million per month to R$195,000, along with a reduction in the variable grant from R$9 to R$4 per ton moved.

Source: Valor Econômico

Click here to read the original text in Portuguese: https://valor.globo.com/empresas/noticia/2024/02/07/no-porto-de-santos-disputa-por-terminal-e-alvo-de-critica.ghtml

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