Later This Month, Government Will Open Consultation On The Privatization Of Santos Port

Public Consultation on the Privatization of the Port of Santos, Which Will Happen in 2022, Is Set to Open on the 20th

The forecast for the Port of Santos is that it will be auctioned in the second half of 2022. In light of this, it is likely that the Federal Government will open the public consultation for the privatization of the port on January 20. With this act carried out, the sale model for the port complex, which is the largest in Latin America, will have its details known.

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The Ministry of Infrastructure also plans to publish, on January 14, the auction notice for the Companhia Docas do Espírito Santo (Codesa), which is responsible for managing the organized ports of Vitória and Barra do Riacho and will be auctioned for privatization in the first half.

The process of selling public ports will begin with the privatization of Codesa. After this sale, the largest venture in this portfolio will occur – the Port of Santos. With the privatization of this port complex, the expectation is that the company will be positioned as the largest port in the Southern Hemisphere, which will attract around R$ 16 billion in investments.

“We will publish the Codesa notice on the 14th, our first privatization, and we are excited to move forward with this project. We believe there will be both national and foreign players for Codesa; we are talking to many people”, stated the Secretary of Planning, Development, and Partnerships of the Ministry of Infrastructure, Natália Marcassa.

Investments in the Port of Santos

The Ministry of Infrastructure aims, in the medium term, to deepen the channel to 17 meters, an initiative that will enable 400-meter ships to enter Santos. According to the National Secretary of Ports and Waterway Transport of the Ministry of Infrastructure, Diogo Piloni, this work, combined with other projects such as remodeling rail lines in the port and investing in leasing contracts, will allow Santos to handle more than 240 million tons of cargo by 2040 – 146.6 million tons were handled in 2020 (2021 data has not yet been released).

The privatization plan for the Port of Santos can only be evaluated by the Federal Court of Accounts (TCU) after the public consultation process and the modeling closure have occurred. Regarding Codesa, the Court has already approved the auction, allowing the notice to be published on January 14.

The diversity of operators and the types of cargo handled at the Port of Santos make it necessary to have a model to reduce risks of conflicts of interest between the companies that run terminals within the port and the new administrators of the complex. Thus, to privatize the Port of Santos, the Government has decreed rules – and is studying more options – with the aim of preventing the abuse of economic power by the future administrator.

Therefore, in relation to what was established for the privatization of Codesa, the Government has increased the number of companies that will have limitations in the competition. The rule is that port operators or those from the state of Espírito Santo cannot be part of the next concessionaire with more than 15% individually or 40% collectively. As for the Port of Santos, in addition to the restrictions concerning operators, the limitations will also affect shipowners and railway concessionaires operating within the port. However, the percentages remain the same.

The Government is also considering another way to prevent the concentration of activities in the Port of Santos through privatization, but has not yet reached a conclusion regarding the tool. What is being evaluated is limiting market concentration for companies operating in the complex. The rule needs to take into account the peculiarities of specific sectors, especially considering that the Port of Santos handles multiple types of cargo.