Cautious optimism greets ambitious tender plan

A new National Plan for Port Policy, or PNLP, has been in the works for almost a year and now requires just the approval of Brazilian President Dilma Rousseff to be set in motion. The plan would call for concessionary tenders to be put out for 98 terminals around the country, which have been privately managed since 1993 or earlier and have contracts expiring this year.

The terminals in transition account for 32% of Brazilian cargo, and the government wants to mandate new investment and expansion on incoming managers to spur long overdue development at key ports. All 36 public ports are near their saturation point for cargo, with some surpassing it already.

Government standards on how private management would have to develop ports and terminals under their care are expected by June. At least $20bn in new investment, primarily for the aging terminals with expiring contracts, is expected to come from development mandates for concession winners.

Creative managers that have the technical experience to boost terminal production, and will be eager to invest to that end, will be a welcome change for Brazil, says Sergio Salomão, president of the Brazilian Association of Public-Use Container Terminals, or Abratec.

New private management could also quickly eliminate the role of political parties in trying to procure – or delay – funding for ports based on labour union support, something that has entrenched itself in Brazilian infrastructure for decades, he says.

Some in Brazil’s private port sector say they’re concerned new federal guidelines may establish excessive requirements for investment or environmental efficiency that winning auction bidders can’t meet. Rules will need to be clear about how contracts could be cancelled for management that fail to hit growth benchmarks on time, in order to reduce investor risk before an auction.

Which ports and terminals are put up for auction will likely be decided by President Rousseff, who steered a similar airport auction plan last year. Leading candidates include the new port of Manaus, which the government says has investor interest, followed by new ports in Espirito Santo and southern Bahia state. Another favoured site is the Port of Imbituba, in Santa Catarina state, privately managed with an expiring contract in the heart of one of Brazil’s busiest agricultural export zones.