Government Aims to Streamline the Port Sector and Implement Temporary Contracts at Public Ports

Audit of the Federal Court of Accounts (TCU) Concluded That Organized Ports in Brazil Face Bureaucratic Issues and Underutilization

This year, the government aims to implement an agenda for the deregulation of the port sector, with new contracting models in public ports. According to an audit conducted by the Federal Court of Accounts (TCU), the conclusion reached was that organized ports in the country face bureaucratic issues and underutilization.

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What is primarily sought by the Secretariat of Ports and Waterway Transport of the Ministry of Infrastructure is the reinstatement of temporary contracts, previously used but overturned by court decisions.

One of the audit’s recommendations – which still needs to go through the Court’s plenary – is for the government to create contracting mechanisms that enable the exploration of operational areas of organized ports for which leasing is not suitable, such as temporary use contracts.

Diogo Piloni, National Secretary of Ports and Waterway Transport, says, “We are considering moving this to legal status, this and other simplifications.”

According to Estadão, the solution is being considered in the context of worrying numbers for the public port segment. The TCU audit identified an average overall idleness rate of 56% in the main organized ports. For the Court’s technicians, one of the limiting factors for exploring these spaces is that leasing – “with all its difficulties” – is the only form of contracting between the port authority and the terminals.

This type of contract is seen as rigid (it can last up to 35 years) and unable to provide leased terminals and the port authority with the flexibility required by the dynamism of commercial flows in the port sector. Furthermore, its bidding process is viewed as extremely time-consuming, as it can take more than two years from the start of studies to the signing of the contract.

In the contract model used by the government in the past, an area could be handed over without bidding for up to 60 months (5 years). The conditions were that the company had no leasing in the port and the cargo to be handled was not consolidated at the location. Subsequently, the operation could then undergo a bidding process.