Privatization: Common Sense Is Required

SÃO PAULO – A study prepared by the World Trade Organization (WTO) shows that if there is no recurrence of the coronavirus (COVID-19) pandemic, especially with the emergence of possible deadly variants like Delta, which is highly contagious, international trade could grow by 10.8%, instead of the 8% estimated in March. Once the most acute phase of the pandemic is over, this growth could be even higher if there were no container shortages and cargo movement delays at ports as a consequence of the pandemic.

According to WTO data, the expected growth in exports in South America this year is 7.2%. Imports, on the other hand, are expected to grow by 19.9%, indicating a recovery in the region’s economic activity. At the same time, the trade in services is expected to lag behind the expansion in the trade of goods, especially in sectors related to tourism. For 2022, the WTO predicts a global economic expansion of 5.3%.

In any case, the Port of Santos will need to be prepared for the recovery of pre-pandemic levels. This is expected with the implementation of changes planned by the Ministry of Infrastructure, which are not few. In the first quarter of 2022, the lease of terminal STS 11 on the right bank of the port will be auctioned. Furthermore, 11 auctions are planned for the next four years, which should yield approximately R$ 10 billion to be invested in the leasing of areas, infrastructure at terminals with existing contracts, and road and rail access.

In November of this year, terminals STS 08 and STS 08A for liquid mineral bulk will be auctioned. The auction for STS 53, designated for solid mineral bulk, will be held in 2022. Other auctions are planned but do not have set dates yet. These include STS 10 and the Retro Customs Terminal (TRA) Saboó and TRA Left Bank, designated for container handling. STS 11, located in the Paquetá neighborhood, will be leased for a terminal handling solid vegetable bulk (soybeans, soybean meal, corn, sugar, and wheat unloading). According to the Santos Port Authority (SPA), initial investments of approximately R$ 693 million are planned for an area of 114.7 thousand square meters, with a capacity to store 397 thousand tons. These leases will have an initial term of 25 years.

According to the Ministry of Infrastructure, the privatization of the Port of Santos is expected to generate investments for deepening the draft, dredging services, land access, the construction of the Santos-Guarujá tunnel, among other works and services. The new operator will be responsible for managing SPA, a company majority-controlled by the federal government, which is responsible for the management and oversight of port facilities and public infrastructure.

Whether it will succeed remains uncertain, but if previous experiences are taken into account, privatization has been beneficial for the country. Just look at the telecommunications service, which saw a leap in quality after the privatization of Telebras, while other previously deficit-ridden privatized companies, such as Vale and CSN, are now profitable and generate more revenue for the federal government in taxes than when they were state-owned.

In the area of electricity, the experience has not been successful. In Goiás, for example, with the sale of the Goiás Power Company (Celg) to Ente Nazionale per l´Energia Elettrica (Enel), electricity became significantly more expensive for consumers. Interestingly, the Italian government is the largest shareholder of Enel. In other words, a “privatization” took place, as the company’s profits go to the Italian government. This is why each privatization must be carefully considered and conducted with common sense. After all, it is not a panacea capable of curing all ills.

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

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