Brazil: Dilma vetoes 10 provisions in port restructuring bill
Infra Latin America
11 Jun 2013 | Brazil
Dilma vetoes 10 provisions in port restructuring bill
Brazilian President Dilma Rousseff has signed the port restructuring bill that recently passed ongress, using the line-item veto to cross out 10 provisions and “ensure the opening of Brazilian ports and avoid legal uncertainty,” Chief of Staff Gleisi Hoffmann said.
Renan Calheiros, president of the Senate, will now convene a special session of Congress to vote on the revised bill, including line-item vetoes applied by Dilma.
Congress passed the bill in May with 55 amendments, and Dilma approved 45 of them. If Congress endorses the revised version, the government can begin the auction process for a potential 159 port terminal concessions, including 42 new terminals in undeveloped areas, 46 terminals with expired contracts and 71 terminals with lease contracts that expire before 2017.
Impact of vetoes
Through the line-item veto, Dilma put an end to automatic extensions for port terminal leases at government-owned ports, including terminals leased before 1993. Previously, port terminal leases were routinely renewed for 25 years, bringing the term of a concession to as long as 50 years. Now, however, the federal government will have to approve all contract renewals.
Dilma also vetoed the creation of industrial terminals because the government considered them a likely hindrance to the opening of the port sector. Major exporters, such as steel and mining companies, had requested the new division of industrial terminals be created and they wanted to build new terminals to handle their own cargo.
The legislation that passed Congress stated that the exporting companies would not need to participate in a bidding process to operate these private terminals, but the stipulation was denied by Dilma.
According to rules for the port sector that were introduced in December, privately used terminals (TUPs) can handle third-party cargo without any restrictions.
Once the new law is in place, the government intends to begin the procurement process for four lots of port terminals, with the first lot involving 26 port terminals at the Port of Santos in São Paulo and another 26 at the Port of Belém in Pará. Feasibility studies, which are expected to be published by mid-July, estimate required investments of BRL 2bn (USD 935bn) for the first lot.
Antaq intends to hold a public consultation period on the first lot of port terminal concessions in August, issue the final tender documents in October, conduct the concession auctions in November and reach commercial close in early 2014.
The second lot includes 43 terminals at ports in Salvador and Aratu in Bahia and at the Port of Paranaguá in Paraná, while the third lot includes 36 terminals at the Port of Suape in Pernambuco, the Port of Itaqui in Rio Grande do Sul and other ports in the north and northeast. The last lot involves 28 terminals at ports in Vitória, Rio de Janeiro, Itajaí, São Francisco do Sul and Rio Grande.
The bidding process for the separate lots will all start one month after the beginning of process of the previous lot, meaning the second lot will kick off in September, the third lot in October and the fourth lot in November.
The government has said it will award the new port terminal leases to the operators that promise to handle the most cargo for the lowest fees, rather than the bidders that offer the highest upfront fees.
“The operators will have efficiency targets in their contracts which, in turn, might be terminated by the public authorities in case they are not able to meet them,” said Márcio Monteiro Reis, a specialist in Brazilian port legislation at local law firm Siqueira Castro.
Antaq will be in charge of the procurement process, but special ports secretariat SEP will sign and enforce the concession contracts with the private operators.
Antaq is also considering 123 proposals to build and operate private port terminals, including 63 TUPs, 44 cargo transhipment stations, 11 small-sized public port facilities (IP4) and five applications for tourism terminals, estimated to require BRL 25bn (USD 11.7bn) in investments.
Antaq will evaluate all proposals if it receives more than one offer for each project but it will favor the bidder that made the original unsolicited proposal in case of a tie.
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