Brazil Proceeding with Sale of Port Concessions to Spur Investment
Brazil is continuing to move forward with its plans to privatize the operations of the country’s major infrastructure, including ports and many of the terminals. In the latest round of auctions, the federal government reported on August 13 that it had received bids of approximately $7.5 million for the concession to three ports in the north, while the Ministry of Infrastructure and National Waterway Transport Agency signed contracts for five ports terminals in the south offered at auction in April.
The strategy is designed to attract corporations to participate in enhancing Brazil’s infrastructure including ports, railways, airports, and highways. The hope is that by offering concessions in which companies pay the government a fee to operate the facilities and commit to large investments to enhance the infrastructure Brazil will spur its lagging economy. The Financial Times reported that Brazil could secure more than $50 billion in commitments for 100 infrastructure projects by the end of 2022.
The auctions conducted last week included the ports of Santana and Fortaleza as well as one of the prizes, the larger port of Salvador, which is the capital of the state of Bahia in northern Brazil. The bidding for Salvador was reportedly hotly contested between three companies causing the winner, Intermaritima Portos, to triple its winning bid to more than $6 million for the 25-year concession as well as a commitment to invest another $3.5 million into the operations. The container and cargo port at Salvador handles more than 840,000 tons of cargo annually.
The port of Santana, which serves the agricultural trade with vegetables, grains, and soybean exports, received a single bid from Caramuru Alimentos offering the minimum bid of $1.1 million. The operator committed to significant improvements valued at nearly $8 million. Similarly, the port of Fortaleza attracted a bid of under $200,000, but with a promise to invest $9 million over the life of the concession.
"We have to commemorate this new achievement,” said the Minister of Infrastructure, Tarcisio Gomes de Freitas. “Today we completed 74 auctions of infrastructure concessions in these two and a half years and we have already guaranteed 80,000 million reais (about $15 million) in investments by the winners.”
The federal government also on Friday, August 13, signed contracts for five port terminals for which they had held auctions in April 2021. This included four inland liquid terminals at Itaqui used for storing oil products and the southern coastal port of Pelotas, which is the only port in the region that handles logging and pulp products. The contracts totaled approximately $115 million in investments for the ports.
The latest round of port infrastructure concessions was awarded as the National Waterway Transport Agency reported better than nine percent growth in cargo volumes at Brazilian ports in the first six months of 2021. They said that a total of 591 million tons of cargo had been handled citing the highest growth in iron ore and oil. The agency forecast that volumes would continue to grow in the second half of the year to over 626 million tons with an estimate of over 1.2 billion tons for all of 2021. That would represent a 5.5 percent growth for the ports over the prior year.