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Brazilian Minister seeks to privatise smaller ports ahead of Santos

Photo: Port of Santos Porto-de-Santos-out-2021.jpeg
Three Ministers of Brazil’s Federal Court of Audits TCU have asked to re-evaluate the process of privatisation of the administration of the Port of Santos which will be discussed in 45 days.

The rapporteur, Minister Bruno Dantas, suggested giving preference to privatising other smaller ports before the port of Santos. Bruno Dantas took office as the President of the TCU last week.

According to the Ministers of the TCU there are points pending clarification, particularly whether it is necessary to privatise the Santos Port Authority, which has been profitable recently and others revolve around sound competition and the construction of a tunnel connecting the two banks of the maritime complex.

With investments expected to be in the order of $3.85bn (BRL20.3bn) the privatisation of the SPA was one of Bolsonaro’s administration’s primary goals. The current model suggests transferring the port authority control over to the private sector and concession of the port structures for 35 years.

Minister Bruno Dantas suggested to “implement the privatisation of other small-sized port authorities whose relevant and complexity are comparatively smaller, with regular risk assessments and monitoring strategies to enhance the current regulatory model and gather experience before proceeding with the privatisation of the Port of Santos.”

Dantas argues that the verticalization of operations is a national-interest issue. The Minister warns that there is a risk of prominent players abusing their dominant positions in the long run, making all other ports in the region struggle.

Thus, he ordered the Ministry of Infrastructure and the National Waterway Transportation Agency (Antaq) to include in the contract “a robust regulation to prevent the practice of vertical integration from turning into market concentration and abusive practices that harm free competition and national interests.” He argued that such regulation should consider the possibility of banning companies under corporate control identified by the Administrative Council for Economic Defence (Cade) from submitting bids unless the auction fails to arouse the interests of other groups.

Regarding the construction of the tunnel between Santos and Guarujá, Dantas said it would represent a development opportunity and that the current proposed model of having the future manager of the Port of Santos build and operate the tunnel is the best option.

The procedures leading up to the privatisation of the Port of Santos began three years ago, with the expectation of having the call for bids published and the auction finalised still in 2022, which did not occur. The victory of Luiz Inácio Lula da Silva, who had already positioned himself against the project, and the various requests for changes made during the process made fulfilling the plan difficult. According to information from the government transition team, the president-elect wants more time to evaluate the privatisation model.