* Rousseff looks to private sector for "investment
* Aims to make Brazil's ports more efficient, lower cargo
* Follows plans to upgrade airport, road, railway
By Anthony Boadle
BRASILIA, Dec 6 Brazil's government on Thursday
unveiled a $26 billion public-private drive to modernize clogged
sea ports, whose high costs and notorious delays are eroding the
country's competitive edge as a major commodities exporter.
President Dilma Rousseff said she was counting on an
"explosion" of private investment to supplement an unspecified
amount of government funds. The $26-billion (54.2-billion-real)
program extends efforts by to reduce the drag on economic growth
of crowded highways, decaying bridges, a rickety electric grid
and other over-stretched infrastructure.
Rousseff has increasingly turned to private companies to
invest money and know-how to fix the problem.
According to the government, Brazil's 34 major ports are
unprepared to deal with a potential quadrupling of port traffic
to nearly a billion tonnes a year by 2030. Ports in Brazil's
industrially developed southeast are working at near 100 percent
capacity and those in the rest of the country are expected to be
saturated by 2016.
"The problems that we have with roads, railways and ports
are the things that create our infamous 'Brazil cost' which is
probably the main thing keeping Brazil from realizing its
economic potential," said Alvaro de Oliveira Jr, head of
operations for Itaoca Terminal Maritimo, which is building a
port to service offshore oil development in Espirito Santo
The government wants to reduce transport costs by 20 percent
in coming years, according to the transport ministry.
LEADING WORLD EXPORTER
Despite its clogged ports, Brazil is the world's largest
exporter of coffee, sugar, beef, orange juice and ethanol, the
second largest exporter of soybeans and iron ore. Its oil
industry, concentrated in offshore fields, could make the
country one of the world's top four producers by 2020.
Ports handle 95 percent of Brazil's trade, Rousseff said.
As with her other programs, Rousseff is looking to private
companies and investors to help provide the capital, expertise
and agility that the government lacks.
To that end, she seeks to open bidding next year for the
right to build and operate new ports and to install private
terminals inside existing government dockyards.
In a major change, port licenses will be granted to the
group that offers to charge the lowest handling cost for the
greatest volume of cargo. Previously the rights were sold to the
company willing to pay the government the most for port rights.
"We want to increase the efficiency of Brazilian ports with
this partnership, which will make our exports more competitive
and increase production," Rousseff said. "We want an explosion
of investment through this partnership with the private sector."
The bulk of the investment would be made between 2014 and
2017, Ports Minister Leonidas Cristino said. To stimulate
competition, both public and private groups will operate ports.
"Our initial read is that this package is positive and it is
clear the government is keen on boosting global and local
coastal trade, creating the right conditions for an economically
sustainable future for Brazil," said Peter Gyde, Chief Executive
of Maersk Line Brazil.
Denmark's Maersk Line is the world's largest shipping
container carrier and has 15 percent of Latin America's
container shipping market.
Some remain skeptical the government will be able to realize
its goals. Port modernization and improvement has been a major
public issue for several decades.
The promotion of Brazil's top port official to a cabinet
position during the 2003-2010 government of President Luiz
Inacio Lula da Silva did little to speed up essential dredging,
dock construction or port access work, said Nelson Carlini,
chairman of Logistica Brasil, an investment fund which has
invested more than 500 million reais ($240 million) in Brazilian
private container terminals.
"Nothing will be done until those who profit from our bad
ports, the unions and politicians who live off patronage, are
forced to accept competition, and I don't think this government
has the will to break that," Carlini said. "Lula tried for eight
years and got nowhere, things actually slowed down."
The ports slated for modernization include Rio de Janeiro,
Paranagua, Brazil's main soybean port, Porto Alegre Itaqui,
Pecem, Suape and Santos.
Santos is the main port for Sao Paulo, South America's
industrial heartland, and a leading sugar and coffee port. It is
Latin America's largest port by value of goods moved.
Cristino said the government plans to build a new seaport in
Manaus on the Amazon River to handle ocean-going ships. A new
deep-water port is also planned for Espirito Santo, an
oil-producing state and key export route for Brazil's interior.
He said contracts will be granted to dredge ports, starting
at Santos, and the number of pilots to guide ships in and out of
ports will be increased.
A lack of pilots has led to extremely high costs with some
earning more than $1 million a year. Ships up to 5,000 tonnes
displacement will be able to dock without pilots.
The port investment plan follows a 133 billion reais
investment package the government announced earlier this year to
improve its road network and expand a woefully-inadequate rail
system in the continent-sized country.
Three major airports have been handed over to private
management and more airport concessions are expected to be sold
by year end.