BRASILIA Feb 4 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
He added that he expects operators to spend about $7 billion
(17.2 billion reais) to improve the terminals over the next
"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.