We have met with port new director and he gave us the following information he obtained in a meeting he attended in Brasilia on 12th March 2019. Although he is new in the office, it seems he well informed and has accesses to Federal Authority.
According to the director, the Brazilian Mr. Jair Bolsonaro is bound to investigate the possibility to privatize the state-run ports, which would include the port of Paranaguá and mainly the biggest South America port of Santos.
This is thought to follow the model adopted in the UK and New Zealand, whereby the entire port passes into private hands, as opposed to the state retaining ownership of the port with individual terminal operations ceded as concessions to the private sector.
However, the plan is viewed with suspicion by labours unions who bear the work monopoly in the ports. They claim that it could result in drastic job losses, especially in the ports operations, and a complete change in the way port companies are organised.
The Brazilian Association of Port Terminals (ABTP) is less concerned by who runs the ports, as long as they are flexibly and effectively managed. The organisation’s president said that outright privatisation, a management concession or even a hybrid model could all work. Nevertheless, ABTP asked for a cautious approach, focused on increasing efficiency and reducing costs.
In the meantime, in future port tenders, the government is considering increasing the benchmark rate that targets profitability. The weighted average cost of capital for future projects will henceforth be between 8.75% and 10.02%. The previous level of 8.03% was considered too low by potential bidders.
