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BRASILIA, Feb 4 (Reuters) - Brazil's stalled port terminal auctions will weather legal challenges this year and draw about $7 billion in private investment to ease the flow of record grain exports through clogged docks, the country's ports minister told Reuters.
Objections from the federal audit court, or TCU, delayed President Dilma Rousseff's plan to start leasing public port terminals to private companies last year and some operators threaten additional lawsuits over existing concessions.
Still, Rousseff's team has incorporated all but four of the 19 conditions the TCU imposed and expects the remaining technical disagreements will be resolved in time to lease 159 terminals this year, said Ports Minister Antonio Henrique Silveira, an economist who took on the job in October.
"Without a doubt we'll be able to start the auctions in the first half of the year," Silveira said in an interview late on Monday.
He added that he expects operators to spend about $7 billion (17.2 billion reais) to improve the terminals over the next three years.
"There's a lot of interest as well as a fair amount of doubt and a certain skepticism," said Silveira, acknowledging worries among potential bidders and bankers that the auctions will remain stuck in court.
Brazil's deficient ports, unimproved for decades, are a vivid example of how insufficient infrastructure and red tape in the commodities powerhouse have dragged down economic growth in the once-booming emerging market star.
After a painful trip along Brazil's pot-holed roads, grain-laden trucks last year lingered for weeks outside the main grains exporting port of Santos, waiting to load their cargo onto ships that also spent days idled at sea. ()
Ports are proving to be one of the most challenging hurdles in Rousseff's $100 billion plan to upgrade infrastructure with private capital. After some initial problems, auctions to operate roads and airports have gained momentum and were hotly contested in 2013.
Silveira said subsequent port terminal auctions would be smoother, once the TCU's questions have been addressed. He said new port legislation approved last year gives the central government enough authority to move forward.
Yet some port industry players caution that the federal government's newfound authority in the terminal leasing model is already causing more legal difficulties.
Of the 159 terminals Silveira said could be auctioned off in 2014, about 50 could stall as their current operators go to court to try to extend their expiring concessions, said Wilen Manteli, head of Brazil's Port Terminals Association.
"If all those legal questions are answered and the government guarantees legal certainty then you will have a lot of companies participating in the auctions," said Manteli, who represents most of the country's terminal operators.
As Brazil grapples with efforts to expand terminal space, the country's soybean exports continue to rise, and international traders are anxious to avoid a repeat of 2013's delays. Ships waited for up to two months at Santos to load grains last March.
Silveira promised 2014 would be better with more coordination between authorities.
In the longer term, Brazil hopes to shift some of the burden of its grains exports away from the southern ports by sending grains out through the northeast, closer to the Panama Canal.
Though Santos will continue to be the main export port for grains, shipments through ports in Para state should increase from three to four million tonnes in 2014 to 15 million tonnes by around 2020, Silveira said.
Terminals at the port of Santos as well ports in Para are in the first round of bidding.
Brazil became the world's largest soybean exporter last year and is expected to export some 45 million tonnes of the oilseed this year, mostly to China.
Grain giants like Cargill, Bunge and ADM are already investing in the new northern outlet even though roads to the river ports are not finished and railways to the northeast have not been able to get off the ground. The government has not yet auctioned off railways because investors are demanding changes to the concession model.
Some firms, like Japan's Marubeni Corp may wait for port infrastructure to improve before investing there.
"Marubeni would like to see those ports operational and working before they invest," the firm's grains chief in the Americas William Gallo told Reuters last week.