Brazilian government pushes ahead with ports privatisation

Moreover, the country’s ports still struggle from a lack of investment in modern cargo-handling terminals and, with an uncertain legislative and political environment, attracting private and foreign participation can be challenging.

Of the public ports, Paranagua posted the strongest performance. The 6.3Mt handled at the southern Brazilian port, which is located in the state of Paraná, was up 12.1% on the previous year. Above average rates of growth were also recorded by Itaguaí (+10.2%) and Santos (7.7%).

Privatisation push

Despite a chequered record on port privatisation projects in Brazil, 2023’s positive performance and strong results in the sector will mean the government pushing ahead with a number of asset sales and operating concessions. The process should benefit from President Luiz Inacio Lula da Silva’s decision to extend Reporto – officially known as the Tax Incentive Program for Port Modernization and Expansion – until 2028.

Primarily, Reporto companies buying equipment to expand and improve port and rail infrastructure are given exemption from various federal taxes, including import taxes and any taxes liable on industrial products, such as cargo handling machinery.

The government’s New Brazil Growth Acceleration Plan, which was launched in the summer of 2023, should also stimulate investment in the ports sector. It envisages expenditure of at least BRL1.3T (US$262M) by 2026 and BRL1.7T by the end of the president’s four-year term. A broad range of sustainable developments, principally through a mix of public-private partnerships, will be supported by the programme.

“We need to improve Brazil’s ports, enhancing governance, technology, and, above all, dialogue with the international market,” said Silvio Costa Filho, Minister of Ports and Airports. “Ports are important to the Brazilian economy and public and private investments, especially investments from the productive sector, are crucial.”

Public bidding

At least 19 auctions are planned this year and as many as 35 over the next three years, according to Brazil’s Ministry of Ports and Airports (MoPA). It is hoped that close to BRL12B will be raised from the 16 concessions being awarded by the federal government (BRL8.2B) and three projects in the port of Paranagua (BRL3.5B), where the administration is decentralized, this year. It is hoped that over the three-year period, in excess of BRL14.5B will be raised.

The first auction this year is set for March. It will involve four terminals – for handling fertilizers, rice, soybeans/corn, and malt in Recife – and a container handling facility (STS33) in Santos.

Other projects in the pipeline for 2024 include:

• A long-term (25-year) lease agreement for the port of Itajai, which includes managing the access channel and operating the container terminal, and is worth BRL2.9B.
• Dredging and then maintaining the access channel at the port of Paranagua, reportedly needing an investment of at least BRL1B.
• A terminal for handling minerals in the port of Itaguaí, reportedly seeking an investment of BRL2.7B.
• Grain terminals in Paranagua (PAR 14 and PAR 15).
• A grain terminal in Vila do Conde.

The planned Itajaí auction is particularly interesting despite the model for the concession not being finalized. The container terminal has been idle since the end of 2022 when APM Terminals’ concession for the facility expired. There then followed months of disruption across the port as arguments broke out about any future agreement.

With channel maintenance now also included in the concession, which is different from the original plan, it will be interesting to see who will apply and what the level of interest in the project will be. However, Brazil’s record on privatizations could mean some of these projects slipping into 2025.

Santos expansion

At Santos, the country’s largest port, Anderson Pomini, president of Santos Port Authority (APS), has outlined investments in excess of BRL7B for 2024.

• Dredging the port’s main access channel to 17m from a current depth of 14.5m.
• Deepening alongside water depths between warehouses 12A and 23.
• Refurbishment of Barnabé Island wharf.
• Improvements to the Alemoa ring road on the right bank.
• Phase two improvements to the left bank ring road.
• Installation of the image monitoring system (VTMIS).
• Construction of a tunnel linking the cities of Santos and Guarujá.

In addition, APS intends to create new parking areas for trucks and to move ahead with general expansion projects in the port’s polygon and Valongo Park areas.

BTP renewal

In other developments and after two years of review, MoPA and APS have renewed the concession for the APM Terminals/Terminal Investment Ltd-operated Brasil Terminal Portuário (BTP) terminal. The new 20-year concession for the facility, which opened in 2013, will mean the two companies will now have operating control of the terminal until 2047.

BTP plans to invest about US$390M in the terminal will increase its annualized handling capacity by approximately 40% to about 2.1M TEU a year. Four STS cranes will be purchased, increasing the number on the quay to 12 units, and 27 more RTGs and 46 more terminal tractors will be acquired. BTP will also expand the terminal’s yard and increase the number of electrical plugs for reefer containers from 2,128 to 3,500 outlets.

Reports suggest that BTP’s productivity and operating efficiency have declined as volumes have crept up to 95% of the terminal’s design throughput capacity. In some cases, ships have also been forced to divert to other terminals to load/discharge cargo.

“We will grow in efficiency and sustainability, with a lot of innovation and new electrified and more digital equipment,” said Ricardo Arten, CEO of BTP. He explained that the terminal would acquire a new fleet of electrified equipment, new maritime defences for the dock, gate automation, and an extensive civil construction plan for adjusting the current configuration of the buildings.

“It is undeniable that the Port of Santos demands more capacity, with the potential to become a hub for Latin America,” said Leo Huisman, APMT’s VP for Latin America. “With the renewal of BTP’s contract, we are convinced that Brazil will have more relevance and participation in international trade.”

Elsewhere in Brazil, APMT has the approval of Antaq to develop and then operate a new container terminal in the port of Suape, northeast Brazil. The new terminal will be located at the Governador Eraldo Gueiros Port Industrial Complex (Suape) and is due to open in Q2 2026. It is scheduled to be the first fully electrified terminal in Latin America with APMT investing approximately US$320M into the first phase of its development.

It will feature a remote controlled RTG system and it will have its own 5G network, which will make it possible to transmit information in real-time to customers, 24 hours a day, seven days a week, according to APMT. The new terminal, which will have the capacity to process 400,000 TEU a year, will boost Suape’s annualized box handling capacity by 55%.

MSC/TiL is also investing in projects outside of Santos. In Navegantes, an estimated US$630M is to be spent on dredging and rebuilding the quay and carrying out various other improvements to the facility’s infrastructure.

“We are expanding our presence in Brazil and actively seeking opportunities to enhance our capacity. There is a latent demand in Brazil, and if port capacity in the country were to double, the demand would follow,” said Ammar Kanaan, President of TiL.