Brazil approves financing priorities for offshore support vessels

Brazil's merchant marine fund FMM has approved funding priorities of around 1 billion reais (US$180 million) for the construction of three offshore support vessels, a source familiar with the matter told BNamericas.

The funds will go toward two PSVs (platform supply vessels) from Bram Offshore, part of the Edison Chouest group (700mn reais), and one MPSV (multipurpose vessel) from Oceânica (309mn reais). 

They are part of the 12bn reais recently approved to support 32 private initiatives ranging from shipbuilding to the modernization and expansion of port terminals, according to the ports and airports ministry.

The green light means that Bram and Oceânica will be able to contract financing from FMM's financial agents, which include federal banks such as BNDES. 

The offshore vessel funding requests reflect the resumption of state-run oil firm Petrobras' tenders to charter new-build units in Brazil. 

The company is currently tendering at least 12 PSVs and 10 OSRVs (oil spill recovery vessels), with a minimum local content of 40% for construction and contracts for up to 12 years.   

“It's difficult for companies to raise financing without having long-term contracts to guarantee funding,” the source said on condition of anonymity. 

The meeting at which the new funding priorities were approved took place on September 6, after a series of postponements. 

According to the source, the sector was awaiting the publication of government regulation for the prioritization of FMM financing. This is because, with the publication of the law that instituted the cabotage transport stimulus program (BR do Mar) in 2022, port infrastructure projects were made eligible to claim such funding from the FMM. 

The fund also approved resources for projects of this nature, but after shipping companies and shipyards presented their requests, it was decided to wait for the regulation, which ensured that they would have preference when it came to obtaining loans. 

“The fund is currently in surplus, but infrastructure projects require large investments,” the source said. 

The source also warned that the FMM support will be of little use if the supplementary bill regulating the tax reform (PLP 68) does not guarantee the sectoral incentives provided by Brazil’s special registry (REB). 

“If this doesn't happen, we expect an increase in the tax burden that will make it impossible to build ships in Brazil,” said the source.

The PLP details the rules for unifying taxes on consumption, the cases for reduced taxes and rules for reimbursement of the sums paid, known as cashback.