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Brazilian Congress passes landmark ports reform bill

Brazilian Congress passes landmark ports reform bill
The Brazilian Congress approved last week a port reform bill that will open the door to private capital and boost investments in ports by $27bn.

It was a success for President Dilma Rousseff as the bill found strong opposition from the states’ governors, who feared losing revenues for their constituencies and unions that saw a diminution of their power.  For Rousseff, it was also an encouraging measure to support the sluggish economy. Stevedores walked out two days in the ports of Santos and Rio de Janeiro in an attempt to stop the bill’s approval.

Brazilian ports are known to be high cost due to a lack of competition amongst among the ports, and shipping lines are often face delays cause by congestion and bureaucracy. So, this new legislation can only please the domestic and international maritime industry.

Many international port operators already have plans for future investments, since the reform authorises private terminals to handle third party cargo and the future criteria for the public ports concessions will be based on the party that offers lowest tariffs rather than highest payments to the government.

The Federal Government wants to remain in control of the promotion and authorisation of new private terminal projects and new concessions in the public ports. However, port authorities controlled by state or municipal governments currently running public ports will be allowed to organise public tenders for future concessions located within their existing zoning plans.          

Congress has introduced significant changes to the text of the original proposal on a number of other important issues such as the possible one-time anticipated renewal for the post-1993 concessions, in exchange for investment commitments- many of them involve container terminals.

Rousseff’s administration faces an uphill task to quickly implement the reforms to solve the congestion problems at the country’s ports because for new projects construction may take as long as four to five years.

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