TCU Audit Flags Irregularities in Proposed Santos Port Expansion

An assessment promoted by Brazil’s Audit Court  (TCU) reckoned that the new occupancy model proposed by APS (Santos Port Authority) for the Saboó area, in the Port of Santos, shows signs of irregularities, promoting a new occupation “without bidding.”

The location was previously slated to house a new major container terminal of the port, called STS10, but is now being split into three terminals to serve other purposes. The report suggests that this could lead to “future infrastructure constriction at the port” and “consumer losses.” Auditors are requesting a precautionary measure to suspend the process, which has not yet been granted by the court.

STS10 was designed to be the new major container terminal in the country’s largest port by 2021 when the then-Ministry of Infrastructure decided not to hold a separate bidding process and would include the unit in the concession process for the entire Port of Santos. The new administration decided to cancel the port’s privatization process and also did not resume the STS10 project, indicating a new solution for the area.

One initial decision was to maintain the Ecoporto contract, which operates a general cargo terminal on-site. Another option was to relocate the passenger terminal from Concais to the area, which currently operates in another region, and the third was to allow BTP, a nearby container terminal, to expand its area to Saboó.

The Port and Railways Audit of the Federal Court of Accounts, in the process of monitoring the port’s planning and zoning, analyzed these changes and indicated various signs of irregularities in how the processes are being conducted, especially the Ecoporto’s continued presence, initiated during the tenure of former Minister of Ports and Airports, Márcio França, by his decision.

Alex Ávila, the National Ports Secretary of the Ministry of Ports and Airports, confirmed that container transport services will continue to be provided at ports across the country, including Santos (SP). However, he did not assure that the proposed solution by APS, which suggests building a new terminal in Vila dos Criadores, would be adopted.

The solution appears to be a “new contract” being executed without bidding, with no technical proof showing that this solution may be more advantageous to the administration compared to other alternatives. Auditors also point out losses if the port does not have a new container terminal.

“The report evaluates that there are no benefits from unjustifiably excluding the STS10 area from the bidding process. On the contrary, delaying so-desired future infrastructure could lead to operational inefficiencies in the medium to long term, resulting from increased waiting times and potential consumer losses. Given that rising demand without a corresponding increase in supply tends to drive up prices,” proposes the report, suggesting a precautionary measure to suspend the process and seek input from the managers involved.

The TCU Audit report was signed on March 26, and, days later, on April 10, APS announced a new solution to house the large container terminal outside the Saboó area. The announcement came shortly after an off-the-agenda meeting between APS President Anderson Pomini and Minister Silvio Costa Filho in Brasília.

“Improve relations”

The new proposal involves enlarging the port’s polygon area to incorporate a neighboring zone in Saboó, spanning 420,000 square meters, known as Vila dos Criadores, into the port infrastructure to house the new large container terminal. APS emphasizes in its statement that “this measure reflects a holistic perspective of the port, encompassing various cargo types rather than focusing solely on one.”

In his statement, Pomini informs: “The concern of the minister [Silvio Costa Filho] and the current management about the need to increase container capacity was clear, as we will densify operations in BTP and Santos Brasil, as well as seek to improve the Port-City relationship by transferring the cruise terminal, Concais, to the Ecoporto area, integrating it into Parque Valongo, which will be the first space for public visitation in these 132 years of the Port of Santos Organized history.”

However, the new large terminal solution in Vila dos Criadores received the worst possible reception among port users interviewed by Agência iNFRA on condition of anonymity.

Infeasible solution in previous assessments

These agents point out that if the solution is implemented, it will take much longer than the already delayed implementation of the new container terminal at the port. They also recall that the Vila dos Criadores area has been under consideration for years for the implementation of port terminal projects, always with the indication that it is unfeasible.

One major issue would be the displacement of thousands of families residing in the vicinity. The absence of road access to the site would render truck operations impractical. Moreover, there are challenges posed by conflicting existing infrastructures, resulting in costly and complex logistical arrangements. Additionally, expanding the access canal by sea, presently non-existent, would also present a significant and intricate undertaking.

Inadequate channel for large ships

The lack of an adequate access channel in the country’s largest port for container operations is currently another major problem for such cargo operations at the port. More modern and larger ships, above 350 meters in length, can only operate at the port in an almost experimental manner.

Or they need to enter and leave the terminals with much less capacity than they could to avoid grounding because the depth of the access channel to Santos rarely offers more than 14 meters for the ships’ drafts, making operational costs higher. This has taken the country out of the route of larger ships, as shown by Agência iNFRA’s report.

In addition to the inappropriate channel for larger ships, the three container terminals in the region indicate that they operate with capacity beyond what would be internationally appropriate standards for the market, increasing the waiting time for ships to dock in Santos. The current indication is that the waiting time today is more than double that of 2019 when the studies for STS10 began to advance.

The consequences of this are increases in box rate prices, which are the prices that terminals charge shipowners, for operating containers.

Source: Agencia Infra

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