How much investments do Brazil's ports need?

As a global heavyweight in terms of commodities production and exports, Brazil needs to improve the poor quality of its ports in order to overcome bottlenecks and reduce logistics costs.

Fábio Barbalho Leite, a lawyer specialized in administrative and regulatory matters at local law firm Manesco, Ramires, Perez, Azevedo Marques, told BNamericas that there is multi-billion dollar investment demand at the country's ports but the issue of regulation needs careful consideration.

BNamericas: Could you give us the current outlook for investment opportunities in Brazilian ports?

Barbalho Leite: Until mid-2017, about 160 applications for lease extension were submitted to the government, conditional on investment programs for port lease. These projects totaled more than 130bn reais [US$34.8bn].

The figure can be considered a safe parameter for estimating investments that are consistent with the current local scenario. It's not a fully projected estimate, but refers to the data presented to the special ports department, SEP, which has this data.

Furthermore, this gives an idea of how much the companies that already have port leases have in their investment pipelines for their own facilities. If we imagine new leases for new companies, this number will grow, but regulatory issues in the country also have to be taken into account.

BNamericas: As you mentioned, regarding regulatory aspects, is there hope that red-tape will soften under the current government?

Barbalho Leite: Actually, the port sector went through a certain centralization with the 12,815 law of 2013. Before the law, bids for new leases occurred at each one of the dock companies, but then they started to be coordinated by the ministry of infrastructure.

The reason for this law is that in the context of 2013 there was an understanding by the government that decentralization had not generated new port lease projects nor new port investments at the speed that the country demanded.

However, there is a concrete fact in favor of centralization. Several new leasing projects have been underway for a year now. All the projects being opened or presented, in addition to those already started or in the process of being started, came from the [former President] Temer government.

In any case, centralization [by the ministry] has accelerated some projects but control bodies paralyze the process more than the ministry's own bureaucracy.

BNamericas: Do you see the privatization of dock companies as a possibility?

Barbalho Leite: There is a maturity by the current government to move forward with this theme. What is currently concrete is the fairly rational and thoughtful disclosure of the special ports department, which is studying this possibility.

The understanding of the current government is that each dock company has its own needs and will need to be checked on a case-by-case basis. That is, a unique solution for each company will be needed in this case.

The government considers this a suitable and appropriate solution for the matter and will study each project with its peculiarities.