Brazil goes public with private aspirations

LAST year marks the tenth anniversary of Brazil’s enactment of Law 8.630, the so-called ‘Modernisation of Ports’ law. Once it had established rules for the implementation of port exploration, service and auxiliary services, it was hoped that this law would represent a significant advancement for the country’s ports system. And it is certainly true that significant advances have been made.

The basic, and most important, part of the new law relates to ports, operations and labour assistance. The law also establishes rules for authorising private sector involvement in the ports and their operation. But over the past ten years the law has been only seventy per cent effective and implemented in a much different way than expected. Now, a number of questions have been raised and suggestions put forward to create new measures and alternatives for the further development of Brazil’s maritime and water transport sector.

The main port, Santos, in the state of Sao Paulo, is responsible for the largest movement of goods by sea serving the south, south-east and middle-west regions of Brazil, along with the other countries of the Mercosul common market. The port today is responsible for 26.9 per cent of Brazil’s total imports and exports. It has increased its operations by sixteen per cent in terms of volume and 26 per cent in terms of numbers of containers. As a result, the Port of Santos Authority is projecting an annual handling throughput of 62.5m tons – a target never before reached. It is hoped that, with proper financial and logistical investment, the port could consolidate its position as a multi-regional hub.

From the information available, it appears that both federal and state governments will be focusing on the water transport system, with particular emphasis on a number of special projects. These include substantial future investment in the development of an agro port and terminal near Santos, plus a number of other projects currently under negotiation to help modernise facilities and reduce import/export cargo clearance costs.

Following enactment of Law 8.630 in 1993, progress towards modernisation of the port system was so slow that, in 1995, the government initiated a programme called PROAPS (Lease and Partnership Programme for Port of Santos). Under the programme, the government began to lease areas to be developed by the private sector, and the results - so far - have been outstanding. For example, in 1995, most vessels calling at the port had to wait about forty days to dock and unload their cargoes. Today, 97 per cent of vessels are able to dock without any delay. In fact, loading and unloading rates for containerised cargo at Santos are now almost up to international standard. Another good example is the loading of sugar cane vessels. In 1995, this took twenty days. Today, it takes only four.

The law also authorised the installation of private terminals along the Brazilian coast. In fact, since 1998, it has authorised private investment in the installation and development of no fewer than 87 terminals – an indication of the government’s move towards the development and growth of Brazilian infrastructure and logistics. In the last ten years, the government has successfully leased 70.28 per cent of available land to the private sector, to facilitate movement at the ports.

The government requirements are very clear. Firstly, the interested party must present a proposal to develop and explore a specific area. The government then evaluates the different aspects of the proposal. Following this, it analyses the proposal and initiates a procedure of public hearing and invitation to bid. At the end of this process, the successful bidder receives authorisation to develop the area, which includes the conditions of development and use.

Another major infrastructural investment at the port of Santos is the construction of a 2.7m-wide tunnel under the Port of Santos Bay linking the east and west sides of the port. Currently, a cargo unloaded from a vessel on one side of the port which needs to be transported to the other side has to be carried by truck 45km by road, generating heavy traffic in the port area. The tunnel will help keep traffic to a minimum.

Many private entities are now involved in the transportation sector, and a number of special commissions have been set up to follow the development of specific projects. The government has also inaugurated a special project to oversee the creation of a transportation system to carry products manufactured in the country to the Port of Santos, for eventual export. This vital project will link the inland manufacturing bases of the Mercosul countries to the port of Santos.

Since the early 1990s, the Hidrovia Tietê-Parana link has been used to transport grain and other cargoes from the interior to the coast, connecting with the railway links to the port of Santos.

Brazil’s water transportation system has great potential. The Brazilian government, with the help of the private sector, is now focused on developing the entire water transportation system to not only make it suitably modern and competitive for the 21st century but also to support the agro production and goods manufacturing sectors.