Port of Santos: What to Expect from Privatization

SÃO PAULO – Still, in this month of October, the Ministry of Infrastructure is expected to open a public consultation for the privatization of the Port of Santos, the most awaited in the port sector, as it will transfer the management of the port complex to private enterprise. Currently, it is overseen by the state-owned Santos Port Authority (SPA), which replaced the São Paulo State Docks Company (Codesp), which, in turn, had replaced the former Santos Docks Company (CDS), which operated from 1886 to 1980. The auction is expected to take place only in the second half of 2022, and the contract with the new concessionaire will last for 35 years.

Although the Minister of Infrastructure, Tarcísio de Freitas, one of the rare shining stars of the current federal government, has touted that the privatization model for the Port of Santos has incorporated lessons learned from structuring the project of the Espírito Santo Docks Company (Codesa), the truth is that this type of concession has never occurred in the country. In other words, unlike other modes subjected to privatization, such as road and airport, where the concessionaire is both an administrator and operator, in the port sector, from now on, the winning company of the auction will only be an administrator since the terminals located at the Port of Santos are already private.

Privatized, SPA is expected to expand its land area from the current 8 square kilometers to 14 square kilometers, incorporating still unexplored areas that are currently outside the operational limits but could give rise to new terminals or projects. The new layout is also expected to include 10 square kilometers of water extension. The main areas to be added are Ilha dos Bagres, on the left bank of the port, and the area around Largo do Canéu, which appears as Largo do Caniú in 18th-century documents and is located near the Piaçaguera canal and the Alemoa port.

It is worth noting that these areas have already sparked the interest of private groups, but no projects have advanced, probably due to a lack of a better definition in the terminal privatization model. For Ilha dos Bagres, the installation of a container handling terminal was considered, an initiative that did not prosper due to doubts about possible demand for another terminal with this profile at the port. In fact, according to the Ministry of Infrastructure’s forecast, the terminals currently in operation would meet the expected demand for the next 20 years, but, obviously, other needs can always arise. In any case, the most consistent idea for that area is to create an industrial port, with the installation of industries directly related to foreign trade.

Initially, the privatization of SPA is expected to involve investments of around BRL 16 billion, which would include the construction of a submerged tunnel between Santos and Guarujá, which would become the responsibility of the new concessionaire since the idea of a bridge between the two municipalities, whose project was publicly presented by the state government in 2010, was ruled out due to the possibility that it may become an obstacle to ship maneuvers in the estuary channel.

The new concessionaire will also be responsible for deepening the navigation channel, which currently has an estimated draft of 14.5 meters. The idea is to deepen it to 17 meters, which would allow 340-meter cargo ships to enter, capable of carrying up to 9,000 TEUs (twenty-foot equivalent units). As for the entry of the HMM Algeciras, the world’s largest container ship with a capacity of 24,000 TEUs, the construction of an offshore platform (away from the coast) would be necessary, even with the injection of foreign capital, an idea that apparently is not part of the plans of the Ministry of Infrastructure.

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Liana Lourenço Martinelli, lawyer, postgraduate in Business Management and International Trade, is the Institutional Relations Manager of the Fiorde Group, consisting of Fiorde International Logistics, FTA Transport and Warehouses, and Barter International Trade. Email: fiorde@fiorde.com.br. Website: fiorde.com.br

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