Brazil's Port Auctions to Attract Private Investment

A plan to attract private investment to Brazil's strained port infrastructure is even more important in the face of federal budget cuts that will curb public investment, Ports Minister Edinho Araújo said in an interview.

Brazil, which has seen exports of iron ore, soybeans, sugar, coffee and beef soar, is planning to lease 29 public terminals, including at the country's largest port in Santos and in the northern state of Para, to private companies under a 2012 law.

The move, currently blocked by a federal audit court, could attract 4.9 billion reais ($1.6 billion) of private investment and increase port capacity by 47 million ton, Araujo told Reuters on Monday.

"We recognize that it is a new law and any new law has its time of transition, but at the moment private investment is more important than ever," he said.

Araujo's predecessor said early last year that 159 terminals could be leased in 2014. But no auctions have yet been scheduled due to further objections from the auditor, the TCU. While the government waits for the TCU to greenlight the port auctions, it is talking with potential investors and will hold a public hearing on concessions early next month, Araujo said.

The goal is to sign long-term contracts with companies that will maintain channel depth and other maintenance work, something the government has struggled with in recent years.

Brazilian President Dilma Rousseff said on Friday that her government would make "significant" cuts to the 2015 budget approved by Congress, amid an economic downturn in Latin America's largest economy.

Araujo said on Monday he hopes to minimize the impact of the cuts on his sector, arguing that projects like dredging could not be interrupted.

He added that a giant kickback scandal focused on state-run oil firm Petroleo Brasileiro SA and Brazil's largest engineering firms would not slow investment in ports.

"I do not see any impediment in this area. There are many companies interested in investing," he said.