Auction is seen as materializing only after port privatization, which depends on presidential election
08/29/2022
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BTP is one of the port’s container terminals — Foto: Ana Paula Paiva/Valor
The federal administration gave up on auctioning this year a new “super terminal” at the Port of Santos, which is expected to expand container handling capacity by up to 40%. Depending on the election results in October, the new terminal – also known as STS10 – will be put on the block only after the privatization of Santos Port Authority (SPA). The studies for that are expected to reach this week the Federal Court of Accounts (TCU), a public spending watchdog not related to Brazil’s Judiciary system.
The change in plans was caused by problems in the studies made by the state-owned company Empresa de Planejamento e Logística (EPL), which will have to be updated, and to competition issues, sources say.
The volume of investments initially calculated in the study, around R$2.2 billion, would have to be updated by 50% because of inflation and the higher prices of the main inputs.
Competition is another concern. Three smaller terminals currently handle vehicles and other break bulk cargoes, such as wind turbine blades and transformers, in the area where STS10 would be built. It is still unclear how cargo flow would be accommodated after the containers arrive.
The studies will be updated because of that, which puts the auction back at an earlier stage than today’s port privatization process. “The end of an administration is not the best moment for such decisions,” said an official that follows the case closely.
The outcome will also depend heavily on the election. If President Jair Bolsonaro is reelected, the privatization of the Port of Santos is likely to be concluded in the first half of 2023, and the “super terminal” would have to be auctioned by the port’s new private-sector owners.
The Ministry of Infrastructure planned to auction the terminal before privatizing the port, but the second option turned out to be the more feasible one. “It was very much reliant on the pace of one project and another. As the STS10 ended up being delayed, they made this decision,” a source within the government said.
In this new scenario, privatization may include some additional requirements, such as maintaining an area in STS10 to handle vehicles and wind power equipment.
If former President Luiz Inácio Lula da Silva wins the election, the original plan is likely to remain in place. Advisors to the Workers’ Party (PT) have already said Mr. Lula da Silva does not intend to privatize the port. In this case, the container “super terminal” would be auctioned by the government, accordingly to the current model.
Designed to revamp the port and encourage competition, the new terminal has the potential to attract R$1 billion in fixed concession payments. If the concession takes place even after Santos is privatized, the government would have to increase the fixed concession payment to offset the loss of such an asset.
STS10 will have a similar capacity to that of Brasil Terminal Portuário (BTP) and Santos Brasil terminals, which today are competing fiercely for leadership in container handling.
According to the current design of the auction, BTP could not make a bid. However, the company’s controlling shareholders – Maersk’s APM Terminals and MSC’s TIL – would be able to participate separately.
According to preliminary studies, the new terminal will have a static capacity for up to 47,500 TEUs (20-foot equivalent units of containers) at the end of the contract, in a total area of 463,800 square meters.
To offer a glimpse of what the investment foresaw in the implementation of the super terminal means, the government has called the bidding for STS08 and STS08A, two terminals for fuels, “the largest port concession ever.” Both terminals will be auctioned in November and will receive a combined capital expenditure of R$950 million.
*By Murillo Camarotto, Daniel Rittner — Brasília
Source: Valor International