Bloomberg News

Brazil Promises Engineering Freedom for Ports Auction Winners

December 20, 2013

Brazil will auction some port terminals as soon as March, Ports Minister Antonio Henrique Pinheiro Silveira said. The terminals will go to bidders promising to move the most goods efficiently at a low cost.

The terms for some of the 29 terminals to be sold in the first round of auctions will be published at the end of January, and companies have 30 days to submit proposals. Silveira said the government will auction the terminals in phases, with the priority of lowering operating costs for producers.

“The government is looking for the best performance, however, the government isn’t going to impose specific engineering strategies ahead of time,” Silveira said in an interview in Brasilia. “There is a certain flexibility for engineering projects, for solutions in each terminal.”

Plans to publish the auction terms this month had to be delayed when the court that oversees government spending set 19 conditions that must first be met, Silveira said. The changes, including updated capacity studies and inventory of technology used, will be finished by the end of January, the minister said.

The government will guarantee land access by railroad, highway and through cities, as well as fully-dredged water access, Silveira said. This requires 6.4 billion reais ($2.7 billion) of investment, according to the website of the state-owned Planning and Logistics Company.

Land, Water Access

Brazil expects a record 200 million tons of grains in this year’s harvest, and last week Silveira announced a joint logistics plan with the ministries of agriculture and transportation to avoid the lines of trucks that were parked on highways for miles, waiting to export last year’s harvest.

The strategy to lower operating costs for producers and make Brazilian goods more competitive should be fully adopted by February, Silveira said.

The first round of port terminal auctions is part of a plan to sell 159 terminals in 2014, divided into four groups. The government expects 17.2 billion reais of private investment for the 25-year contracts.

The first group to be auctioned includes nine terminals in the Santos Port and 20 terminals in different ports in Para state.

Auctions for terminals designated for grains, largely contested by trading companies or groups of companies with vertical supply chains, will be won by bidders proposing the maximum movement of goods. Winners of the four auctions for container terminals will be decided by the greatest discount offered from the maximum toll set by the government.

The ports auctions follow four stretches of highway and two of the country’s busiest airports privatized in the second half of 2013 as part of President Dilma Rousseff’s Program for Investment in Logistics. The program, announced in 2012, is counting on 212.3 billion reais of private investment in Brazil’s infrastructure, according to the Planning and Logistics Company.

To contact the reporter on this story: Anna Edgerton in Brasilia at aedgerton@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net


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