Government extends port lease term to 25 years.

Sabrina Craide
Reporter from Agência Brasil

Brasilia - The government has decided to extend the concession period for the ports of Santos and Pará to 25 years, renewable for an equal period. Initially, the lease term varied between ten and 25 years, depending on the area. According to the Minister of the Special Secretariat of Ports, Antônio Henrique Pinheiro Silveira, the change was made after a public consultation on the subject.

“The issue was widely debated, and the government found it beneficial to make this adjustment for the purpose of more continuous work at the terminals, over a slightly longer period,” he explained. In total, 29 areas will be auctioned, nine in Santos and 20 in Pará. The projected investment in the two terminals is R$ 5,4 billion.

Studies for the concession of the ports of Santos and Pará were delivered today (11) to the Federal Court of Auditors (TCU) by the Chief Minister of the Civil House, Gleisi Hoffmann. These are the first port lease studies under the new regulatory framework that was approved in the first half of the year by the National Congress.

The bidding process should take place later this year, according to the government's forecast. The president of the TCU (Federal Court of Accounts), Minister Augusto Nardes, said that the matter should be analyzed by the end of November. "We hope to be able to finalize the leasing process by the end of the year, so that the new model can be implemented and we can have the competitiveness we want for the Brazilian port system."

The Internal Rate of Return (IRR) increased from 7% to 8%. According to Silveira, the change was made to balance competition between publicly operated and privately operated terminals. The Minister of Ports said that the changes in the first tender should serve as a model for other public port leases, but each lot will be thoroughly analyzed.

The criterion for choosing the winners of the auction will be the lowest tariff, in the case of container terminals. For terminals in integrated chains, such as agribusiness and bulk handling, the criterion will be handling capacity targets. "This means that there cannot be a price ceiling," said Silveira.

Brazil's Attorney General, Luís Inácio Adams, said the government is confident regarding the legal security of the process. "We see no legal risks; no unconstitutional situation has been identified," he said.

Editing: Fabio Massalli