Brazil regulator okays Codesa concession notice

Brazil’s waterway regulator, Antaq, authorized the publication of the concession notice for Espírito Santo state port operator Codesa, the first of its kind in the country.

The authorization also paves the way for similar auctions.

"The advance of the Codesa auction is important, because although the planned concession of other ports has own characteristics, in general terms, Codesa will be a kind of benchmark for the market for the offer of other assets," Fernando Fialho (pictured), a partner at port asset consultancy Modal Consult and former head of Antaq, told BNamericas.

The planned Codesa contract encompasses the port’s administration and the indirect operation of the port facilities of Vitória and Barra do Riacho. It will be valid for 35 years and can be extended by another five if additional investments are needed.

The auction is planned for March and the government expects the winner to invest 335mn reais (US$60.8mn) and spend 1bn reais on operating expenses.

According to Fialho, international port companies and investment funds are most likely bidders. 

After the auction, Vitória port is expected to double cargo handling to 14Mt/y and the Barra do Riacho port terminal is likely to expand, as 522,000m2 of its 860,000m2 area are greenfield.

“It is a historic step that we are taking today. The privatization of Codesa will bring investments, jobs and prosperity to Espírito Santo, in addition to making Brazil more competitive [internationally],” infrastructure minister Tarcísio Gomes de Freitas said in a press release.

The contract winner must pay the government a fee to be set during the auction, plus a variable annual fee of 7.5% of revenue.

The concessionaire will also pay Antaq an annual fee of 3.18mn reais for the inspection and regulation work related to the concession model.

An infrastructure ministry spokesperson told BNamericas that the government aims to publish the concession notice this week.

OTHER CONCESSIONS 

São Paulo state’s São Sebastian port, the state’s Santos Port Authority (SPA), and Santa Catarina’s Itajaí port are planned to be auctioned this year. SPA operates South America's busiest port.

But analysts are sceptical the processes can advance before the presidential elections in October.  

“Mainly in the case of the port of Santos, there is still a long bureaucratic path that depends on authorizations from the [audit court] TCU and Antaq. It is very unlikely that this will happen this year,” Fialho said. 

“But regardless of who wins the election, I don't think there will be a reversal of these ports concessions, as the whole plan was established by career technicians in the public administration; it is not a decision of a specific administration.”