Santos Port Channel Concession May Deter Interested Companies, Expert Warns

The concession model for the navigation channel of the Port of Santos, currently under public consultation, may discourage potential bidders due to the level of risk imposed on the future concessionaire. The warning comes from Disney Barroca Neto, CEO of DEME Brasil. The Belgian-owned company won the country’s first port access channel concession in Paranaguá, Paraná state.

According to Barroca, the model proposed for Santos still requires further technical refinement and includes significant financial and operational demands on private investors.

DEME has been operating in Brazil since 2006 through its subsidiary Dragabras. In October last year, the company won the auction for the Paranaguá access channel concession in partnership with FTSpar. The operating company created for the project, Paranaguá Port Channel Company, will be owned 70% by DEME and 30% by its local partner. The concession will run for 25 years.

Barroca noted that in Paranaguá, the concessionaire is not paid directly for dredging activities but rather based on increases in port throughput, which he says aligns the interests of the company, the port authority, and port users.

“If I dredge a lot, dredge a little, or do not dredge at all, it does not change my revenue profile. What generates revenue for me is the cargo volume handled by the Port of Paranaguá,” he said.

According to the executive, the Paranaguá model was supported by a robust technical foundation and years of accumulated studies, a situation that, in his view, does not exist in Santos.

“From a technical studies standpoint, the Port of Santos did not have as many previous studies available for those who developed this concession model. That significantly increases the risk profile.”

Another point of concern is the proposed financial structure.

“The revenue requirements and concession fees being demanded at the Port of Santos are very high. You have to pay R$200 million per year to the Port Authority, in addition to the variable concession fee. When you add these figures together, the contract already starts at around R$450 million,” he said.

The executive also stated that some of the risks assigned to the concessionaire under the contractual risk matrix are causing concern in the market, particularly those related to future sedimentation in the channel and potential maritime accidents.

“These are uncertain risks that the concessionaire would have to assume, on top of a revenue profile that already involves a very significant level of revenue sacrifice.”

DEME has not yet decided whether it will participate in the future bidding process for Santos.

“Today, I am not in a position to say whether we would be interested,” he concluded.

Source: A Tribuna

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