(Brasilia, December 6, 2012) The Brazilian government today launched the investment package for the ports sector. The ports package is the second chapter in President Dilma Rousseff’s Investment in Logistics Program(PIL). It is designed to upgrade and construct new transportation and logistics infrastructure in Brazil, following the launch of an investment package for road and freight rail infrastructure earlier this year.
Under the terms of PIL, the federal government will invest R$54.2bn (ca $25.8bn) for the ports sector by 2017, plus an additional R$6.4bn (ca $3bn) from the Accelerated Growth Program (PAC), with the latter funds targeting port access infrastructure and dredging.
In announcing the ports program, President Rousseff highlighted the critical importance of the country’s ports, noting that 97 percent of Brazil’s international trade is shipped through them on the way to market. The President said Brazil must position itself for competition in the commodities sector by cutting the costs of export logistics. This, according to the president, will help ensure that Brazil remains one of the world’s strongest competitors in agriculture and minerals exports.
Incentivizing participation by the private sector is also a key component to the ports package, with the government due to award operating licences following the concessions model in 2013. Subsidized financing at attractive rates and repayment conditions will also be available from Brazil’s national development bank BNDES for private companies seeking to invest in ports infrastructure. Existing private port terminals—normally owned by large scale exporters such as Vale—will be open to use by third parties under a new authorization system.
Brazil’s seaports in the southeast region of the country (Sao Paulo, Rio de Janeiro and Espirito Santo) will receive 53 percent of the total. Ports in the northeast (located in the states of Bahia, Pernambuco, Alagoas, Paraiba, Ceara and Maranhao) will receive 22 percent. The southern region ports of Rio Grande do Sul, Santa Catarina and Parana will receive 14 percent and the northern region’s Amazonian river ports in the states of Amazonas, Amapa, Para and Rondonia) will receive the remaining 11 percent.
The focus of the program targeting ports, according to the Minister of Ports, Leonidas Cristiano, is to increase the volume of cargo that passes through Brazil’s ports. To achieve this objective, the ports package aims to:
• centralize planning and carry out institutional reorganization for Brazil’s port infrastructure
• remove barriers to access, both physical and in terms of investment.
Regarding physical access, the ports package saw the launch of the Second National Dredging Plan. It will draw upon the results of studies developed by the National Institute for Oceans and Waterways Research (INPOH) to guide the dredging operations. The government’s objective is to carry out dredging once every 10 years.
On the institutional management side of the program, two new bodies were created:
• CONAPORTOS will integrate port management authorities including customs, police, health control, etc.; and
• The National Commission for Pilotage Affairs, which will include the launch of 206 jobs in the pilotage sector on January 5, 2013.
The government decided against abolishing the seven existing port authorities (companhias docas).
The elephant in the room was the recently created Planning and Logistics Company (EPL), which has been described as a super-ministry despite being a para-statal company. EPL was notable by its absence from any reference during the launch ceremony, although it is clear from its place in the institutional hierarchy (see chart below) that EPL will be a strong player in Brazil’s transport and logistics sector.
SEP = Ministry of Ports; MT = Ministry of Transport; SAC = Ministry of Civil Aviation
CONIT = National Council for the Integration of Transport Policies – a standing Cabinet committee chaired by the Minister of Transport
The President said the ports sector has suffered from a lack of investment for many years and described the current ports package as the most significant change the sector has seen since 1808 when King John VI (then regent of the United Kingdom of Portugal, Brazil and the Algarves) broke the colonial monopoly that had restricted the use of Brazilian ports to Portuguese vessels.
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For More Information: Meena Bhullar, Vice-Consul & Trade Commissioner | Consulate General of Canada in Rio de Janeiro, Meena.Bhullar@international.gc.ca