Privatization of Latin America’s largest port should have more regulatory rigidity, says Brazilian minister

RIO DE JANEIRO, BRAZIL – The privatization of the Port of Santos will have more regulatory rigidity and a “greater tie-in” on port operators’ participation in the concession, compared to other privatizations studied by the government.

The announcement came on Monday, April 5, by the Minister of Infrastructure Tarcisio de Freitas. The tender involving the largest port complex in Latin America is scheduled to take place next year.

“At the Port of Santos, I have to have greater regulatory rigidity and a greater tie-in for the participation of port operators in port management. This is not what will happen, for example, with Itajaí port,” said the minister in life from Infra em Pauta.

Freitas pointed out that this arrangement is different for each port privatization that the government wants to carry out, such as the dock companies in Espírito Santo and the Port of Itajaí.

“We will calibrate according to the characteristic of each port what is the dose of regulatory rigidity or to what extent the port operator will have access or not, will be able or not to become a concessionaire,” answered the minister when asked about what would be the best format for port privatizations that can preserve competition and free market in the transport chain.

Read: Brazil may auction off more than thirty airport and port concessions in April

Although the regulatory and participation adjustments are specific to each port, Freitas recalled that the privatization model, roughly speaking, should follow the primer of selling the company together with the concession of port operations.

The minister also commented that the profile of players interested in these assets is varied. There is a possibility that the consortiums that will compete in the auctions will be composed of port operators and investment funds – which have shown “enormous interest” in these privatizations, said the minister.

“We can take a look at the privatizations that took place in the UK and Australia, players that are there are studying our process. We have talked a lot with these investment funds,” said Freitas.

The minister is directly involved in the week that will see 22 infrastructure assets handed over to the private sector in a series of auctions starting this Wednesday and continuing through Thursday and Friday. In the ports area, the government will hold the auction of five port terminals (four in Itaqui-RS and one in Pelotas-RS).

“In the case of Pelotas (cargo more concentrated in wood), it will end up attracting owners of this cargo. It has an extensive verticalization logic,” commented Freitas. In the case of the terminals in Itaqui, of liquids (fuels), the minister said that the government expects to see a new entrant and the traditional companies that dispute these assets, which are the fuel distributors.

Railroads

In the interview, the minister also commented about the partnership recently closed between the Ministry of Infrastructure and the World Bank, allowing the structuring of the concession project of the East-West railway corridor, connecting Lucas Rio Verde (MT) to Ilhéus (BA).

The studies will cover the Midwest Integration Railroad (Fico) and sections 2 and 3 of the West-East Integration Railroad (Fiol), totaling 1,900 kilometers.

In the projection that we are doing in the market, we are quite confident in the good result of the first segment’s auction. We will have a player that will finish lot 1, operate, make investments in the port, and that will be waiting for this concession after Caetité to Agua Boa, which will really set up a large railroad route,” said the minister.

Source: Infomoney

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