Privatization of Brazil's biggest port now in limbo

The planned privatization of Santos Port Authority (SPA), the federal state-run company that operates Brazil's biggest port, has been put on hold and the initiative is now in doubt.

On Tuesday, the justices on the federal audit court (TCU) requested more time to assess the privatization model before giving it their approval and a final decision will now likely be made in 2023, after President-elect Luiz Inácio Lula da Silva's government takes over on January 1. 

Lula has repeatedly said that he is opposed to all privatizations, meaning that the process could be halted. 

"The privatization model for the port authority was only carried out in Brazil at a single port and more time is needed to assess the risks and problems that might arise," a TCU spokesperson told BNamericas. 

The privatization of SPA was a plan pushed forward by the administration of President Jair Bolsonaro with the aim of accelerating investments in the port sector via the impetus of the private sector.

Under the privatization model, the government would offer a 35-year concession contract that includes dredging works and even the construction of a subsea tunnel to connect the adjoining cities of Santos and Guarujá.

The TCU justices suggested that the country's new government will need to make a more detailed evaluation of the impacts on the port sector of the concession of Espírito Santo state port operator Codesa.

In March, Brazilian asset management company Quadra Capital won the auction for the concession, offering a fee of 106mn reais (US$20mn) to the government.

The firm is expected to invest 335mn reais in the port and spend 1bn reais on operating expenses. The 35-year contract includes the port administration and indirect operation of the Vitoria and Barra do Riacho port facilities. 

The government was planning to use Codesa as a benchmark for other concessions in the sector, including Itajaí port in Santa Catarina state, and São Sebastião port and SPA in São Paulo state.