Upcoming elections decide fate of Port of Santos’ new mega terminal

The Brazilian government momentarily gave up on putting up for bid the new mega terminal at the Port of Santos, which promises to expand its container throughput by up to 40%. Depending on the outcome of the upcoming presidential elections, the new terminal – also known as STS10 – will only be put up for bid after the privatization of the Santos Port Authority (SPA), a process whose preliminary documents the Federal Court of Accounts should review with further scrutiny this week.

According to the Brazilian news agency Valor, the change in plans resulted from problems identified in the technical studies carried out by Brazil’s Planning and Logistics Company (EPL in Portuguese), which will have to be updated, in addition to competition issues.

In the case of the studies, it was found that the initial volume of investments projected, around R$ 2.2 billion, would have to be updated by about 50%, reflecting inflation and the increased prices of essential inputs.

Besides, there is the competition matter. The STS10 would replace three smaller terminals that presently handle vehicles and non-unitized loads, such as wind turbines and electric transformers. There is still no word on how or where these cargoes will be relocated once the containers arrive.

Given these factors, the government decided that the studies need to be updated, which brings the bidding process back to a stage in which the port privatization is more advanced. “The end of an administration is not the time for watershed decisions,” said an official who closely follows the case.

The outcome will also greatly depend on the electoral process. If President Jair Bolsonaro is re-elected, privatization is expected to be completed in the first half of 2023, with new private partners in the port of Santos tendering  the “mega terminal.”

The Ministry of Infrastructure wanted to auction the terminal before privatizing the port, but the second option turned out to be more feasible. “Which would put up for bid first depended a lot on the pace of one project over the other. As things developed more slowly for STS10, the decision was made,” admitted a source in the government.

In the new scenario, the privatization process may include some additional requirements, such as maintaining an area in the STS10 to preserve the movement of vehicles and wind equipment.

If former president Luiz Inácio Lula da Silva returns to the Presidency, the tendency is for port officials to stick to the original plan. Workers Party’s advisors have already announced that Lula does not intend to private the port, a scenario in which the “mega container terminal” would be auctioned by the government, as it would have been in case the tender happened this year.

The new terminal was designed to reconfigure the port and promote competition. It has the potential to attract around R$ 1 billion in grants. Even if the lease takes place after privatization, the government would have to “boost” the granting of the port auction to compensate for the loss of the asset.

The STS10 will have a capacity similar to the terminals of Brasil Terminal Portuário (BTP) and Santos Brasil, which are currently fighting hand in hand for leadership in container handling.

As per the current tender rules, BTP cannot participate in the event. However, the company’s partners – APM Terminals, controlled by Maersk, and TIL, controlled by MSC – would be able to participate separately.

According to preliminary assessments, the new port will have a capacity of up to 47,500 TEUs by the end of the contract, with a total size of 463,800 square meters.

See below the track record of container exports and imports at the Port of Santos from January 2019 to June 2022. The data is from the platform DataLiner developed by Datamar.

Container throughput at the Port of Santos | Jan 2019 – Jun 2022 | TEUs

Source: DataLiner (click here to request a demo)

To give a dimension of what it means to implement the STS10 “mega terminal,” the Brazilian government has been currently referring to the bidding of STS08 and STS08A, two fuel terminals, as the “largest in history.” The two terminals will be auctioned in November, attracting BRL 950 million in investments.

Source: Valor Econômico

To read the full original article, please go to: https://valor.globo.com/brasil/noticia/2022/08/29/governo-reve-superterminal-de-santos.ghtml

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