Public Law, Project Finance and Regulatory

Brazil expected to change port administration policy

Brazil’s government is sending mixed signals regarding the privatization of port operators, but investments might not be negatively affected, according to an expert.

Last week, officials signed a contract to ensure Itajai port in Santa Catarina state “will continue to be public, managed jointly by city hall and the federal government. City hall will be in charge for another 35 years,” ports and airports minister Marcio Franga said in a press release.

Franga has been an advocate of publicly administrating ports, while President Luiz Inacio Lula da Silva wanted to hear experts on the pros and cons first.

In February, audit court TCU approved the advance of the Itajaf privatization, opening a possibility for more such processes in the segment.

“| don’t believe [the model] will be immediately abandoned, but it is a clear sign that Brazil’s port operator policy will change. | believe that each port has its reality and it should be considered,” Paulo Dantas, an infrastructure and project finance specialist at law firm Castro Barros Advogados, told BNamericas.

The concession of Santos Port Authority (SPA), which runs Brazil’s biggest port, in Sdo Paulo state, has been strongly defended by governor_Tarcisio Gomes de Freitas, who tried to convince Lula of the model’s advantages.

Sao Paulo wants to offer a 35-year concession that includes dredging and the construction of a subsea tunnel to connect Santos and Guaruja cities.

Private investors and logistics companies are interested in the port segment, as it has become more dynamic due to robust exports.

“| believe that investments will continue to happen in the segment. The important thing is to add legal certainty to the adopted model, whatever it may be. If there is predictability and the contracts are fulfilled — as they have been over the years — | understand that investments will continue,” added Dantas.