Deciphering Brazil's Port Reform Program

Drewry Maritime Advisors
Monday, December 10, 2012

Seasonal congestion, bottlenecks and queues are realities at Brazil ports: what is the Government doing to ameliorate the situation?

Drewry Maritime Advisors decipher the Brazilian Governments long-awaited port reform & investments program, aimed at unlocking existing constraints within the country’s port system, and their unravelling of a somewhat complicated state of affairs is set out below.

On December 6th, the Brazilian Government unveiled its long-awaited port reform and infrastructure investments package. The announcement of this set of measures was initially to take place in June 2012, but has been postponed several times, an indication of the complexity of the port system’s structure in this leading emerging country.

Seasonal congestion, bottlenecks and queues both in the maritime and the land-side accesses to the ports are recurring realities in many Brazilian ports. One of the reasons can be found in the lack of deployment of new port capacity over the years, while importers, exporters, ship-owners and logisticians alike point at two decades of neglect of infrastructure investments in the sector.

The twofold package consists of:

  • Public investments in port infrastructure, to the tune of US$ 25bn, will apply to new port projects, dredging programs and improvements to the landside access to the ports
  • Reforms of various aspects of the current legal and regulatory structure of the port industry will reflect new orientations in the public-private-partnership framework.


The main items on the reform and reorientation front are:
 

  • Private terminals will be allowed to handle 3rd party cargo
  • The selection criteria for terminal concessions will be: lowest tariff to user i/o highest payment to the Government as hitherto
  • In both cases, the Government will call the shots, within a pre-established national master-plan
  • Port Authorities will be modernized, professionalized and de-politized, and subjected to management contracts
  • Procurement will be facilitated by new, more flexible rules and procedures


A series of thorny issues remain unresolved and will need to be addressed soon to bring serenity back to the sector:
 

  • There exist a bitter rivalry between concessionaires in public ports and private terminals in the container segment. The former complain about what they consider as the unfair competition exercised by the latter. The private terminals position has now been vindicated by the Government, but some concessionaires invoke the unconstitutionality of the recent measures.
  • There will now be 3 different regimes for port operators: private terminals, concessions based on the highest offer, and concessions based on the lowest tariffs. This new framework is ripe with potential further conflicts on the issue of the “level playing field”.
  • Contracts at 98 terminals of all types and sizes have expired or about to expire. Their operators were anxiously expecting that the contracts would be extended, but for 55 of them, the Government has decided that they should be re-tendered. The other 43 might be extended for 25 years, after negotiations involving commitments to carry out new investments and introduce additional capacity and efficiency gains.
  • While the professional associations invoke the existence of repressed private investments to the tune of US$ 5bn, due to the uncertainty of the situation, there are indications that some of the involved operators might actually elect to go to court to protect what they consider to be their legitimate interests.

  
These orientations are dividing the private sector, displeasing the incumbent operators and rejoicing the outsiders. Amidst concerns that some developments might lead to a renewed judicialization of the sector, there are also many positive signals.

“These six months of indecision have frozen many new project developments, on the grounds of heightened regulatory risks” says Michel Donner, Senior Advisor at Drewry Maritime Advisors. “The concerns have been partly reduced, but not completely removed. However, the package (investments and reform) provides a new landscape for the whole sector, among others by facilitating the penetration by new players. The changes are likely to contribute to unlock the badly needed capacity expansion of the port system, and will bring up a host of new business opportunities for private investors, albeit possibly with lower profitability levels.”

The first projects on the Government’s list are: the container terminal in Manaus, and the Porto Sul deep-water multipurpose port complex in Ilheus (Bahia). It has almost gone unnoticed that, coincidentally, both have at long last received their environmental license in October and November, respectively.

Another project likely to progress rapidly is the 2nd container terminal in Suape. This project was in the starting blocks already in April 2012, but had to be slowed down, pending the release of the Government’s policy changes in relation to PPPs.

As the dust settles and debate in the industry continues, the coming months will prove vital in maintaining the momentum this announcement has created, especially as some issues remain unresolved.

Source: Drewry Maritme Adviso
 

 

Maritime Reporter August 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Legal

China Passes New Pollution Law, Will Cap Coal Consumption

Legislators have approved amendments to China's 15-year-old air pollution law that grant the state new powers to punish offenders and create a legal framework to cap coal consumption,

Gazprom, OMV Meet on Establishing Nord Stream JV

At a Meeting held at the Gazprom headquarters between Alexey Miller, Chairman of the Company's Management Committee and Rainer Seele, Chairman of the Executive Board of OMV,

TASI Acquires SignalFire Telemetry

TASI HOLDINGS INC. announced today it has completed the acquisition of all shares of SignalFire Telemetry, located in Hudson, Massachusetts.  This new acquisition

Ports

DP World Profit Up 22%

Global marine terminal operator DP World today announced strong financial results from its global portfolio of marine terminals for the six months to 30 June 2015,

Panama Canal Suspends Draft Restriction

The Panama Canal Authority (ACP) has lifted scheduled vessel draft restrictions brought on by lingering draught conditions in the region.   The ACP had previously set restrictions of 11.

Carnival Ramping Up in New Orleans

Carnival on track for record year from Port of New Orleans in 2015; expects to embark 3 millionth passenger post-Katrina next year   New Orleans’ number one cruise

Government Update

Iranian Ship, Crew Escape Captivity off Somali Coast

An Iranian fishing vessel and its crew have escaped after being held captive for five months by Somali fishermen, maritime piracy experts said on Friday, but it

Migrant Boat Sinks off Libya; 200 Feared Dead

A boat packed with mainly African migrants bound for Italy sank off the Libyan coast on Thursday and officials said up to 200 might have died. A security official in the western town of Zuwara,

Oil Steadies as Equities Rally

Recovering stock markets boost oil prices; U.S. crude on track for first weekly gain in nine weeks. Oil prices steadied on Friday after bouncing back from six-and-a-half-year

 
 
Maritime Contracts Maritime Standards Naval Architecture Pod Propulsion Port Authority Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.5384 sec (2 req/sec)