ABSTRACT
According to the Special Secretariat for Ports (SEP), there are thirty-seven statutory public ports (porto publico organisado) in Brazil.1 The federal
government directly administers nineteen of these maritime ports,2 grouped under the authority of seven dock companies (companhias docas). In addition, eighteen public ports have been delegated (porto organisado delegado) to states, municipalities or public sector consortia (these include fourteen maritime and four fluvial ports). There also are thirty-nine fluvial ports under SEP’s direct authority and 122 Small Scale Public Port Installations (Instalações Portuarias Publicas de Pequeno Porte, IP4) under the authority of the Ministry of Transport (MT). In total, the National Agency for Water Transport (ANTAQ) lists 235 port installations in the country (ANTAQ Resolution 2969/2013). Finally, there are already over 130 private use terminals (TUPs) in operation, a category that is quickly expanding since the elimination of restrictions on cargo-handling based on the differing status of exclusive and mixed-use TUPs in 2013. Thus, under the new law, Brazil retains a hybrid landlord plus service port governance model in publicly owned ports. Private port operators manage licensed terminals in public ports, but do not replace the public port administration or authority (which remains in the hands of the dock company or other public sector delegated authority). It is worth noting that already Law 8630/1993 envisaged the withdrawal of the public sector from port administration and award of full concessions to private operators to run ports, but this has not yet happened. In 2014, throughput in Brazilian ports was just under 969 million tons, 36 per cent in public ports and 64 per cent in TUPs. Bulk solids (minerals and grain) made up about 61 per cent of cargo, bulk liquids and gas 24 per cent, containers 10 per cent and other general cargo 5 per cent (ANTAQ 2015). In 2015, cargo throughput in Brazilian ports for the first time ever surpassed one billion tons (SEP 2016b). Container throughput has expanded fastest and Brazil handles some 17 per cent of the total for the Latin America and Caribbean region (Wilmsmeier et al. 2014). Demand for port services expanded greatly under PT governments (port throughput was 571 million tons in 2003, the first year of Lula’s presidency), not least because of the expansion of Brazilian trade flows in the 2000s (both exports and imports). Yet, the space dedicated to warehousing and cargohandling in port areas increased by less than 5 per cent in the past decade causing immense congestion, waiting times and higher costs for port users (CNI 2014: 13).3 In addition, there were other long-standing problems, related to both physical infrastructure and strategic decision-making capacity with respect to port infrastructure, including both land-and water-side access, preservation of the environment, links with local urban areas as well as the interior hinterland, multimodal integration, and long-term planning
capacity. Finally, while port costs came down from their highs in the early 1990s, The Economist (2013: 42) magazine correctly pointed out that it still cost twice the OECD average to import a container into Brazil (excluding bribes and go-between fees!). Notwithstanding government rhetoric, logistics infrastructure failed to secure sufficient public resources, and ports did worst of all. When the Growth Acceleration Pact (PAC-I, 2007-2010) listed a few port projects among transport sector investments, the World Bank (2010: 53) considered it a ‘momentous attempt’ to boost transport infrastructure, although it acknowledged that ports were allocated only R$2.7 billion reais of a total of R$58.3 billion for the transport sector. IPEA (Campos Neto et al. 2009) noted that PAC-I fell well short of the port projects their researchers had identified as urgently needed. PAC-I was followed by PAC-II (2011-2014) as well as other more targeted investment plans such as the National Port Logistics Plan (PNLP) in 2012, and the Logistics Investment Programme (especially the second edition announced in 2015). Under the new regulations, SEP drew up a concessions plan, where it listed 159 potential areas organised into 4 groups. The aim was to attract investment of US$7.2 billion to increase port capacity and efficiency (SEP 2014). Irrespective of these many plans, most Brazilian ports continued to operate close to capacity and saw little public investment. Additionally, the dock companies were unable to get much-needed financing for new investments or maintenance work in their own right, because banks saw them as too heavily indebted and financially unsound. An exception was the funding approved in the National Dredging Programme (PND) announced in Law 11,610/2007. Although this increased the funds available for dredging, implementation still lagged behind needs and expectations. The second phase of the PND, which launched tenders in 2014, substantially increased available funds and also improved contract conditions (e.g. extending the length of contracts from five to ten years; applying a resultsbased rather than fixed payment method). Moreover, recent dredging activities were focused on updating transport infrastructure to ensure safe passage for the latest generation of large ships of the Post Panamax Plus and New Panamax classes. To make matters worse, SEP and other public authorities repeatedly failed to spend their already low budget allocations for a variety of reasons. For example, SEP invested only US$824 million in ports since its establishment in 2007, whereas some US$3 billion were theoretically available; i.e. it underspent by some 73 per cent (Port Strategy 2015). Business often raised the issue of budget allocations that were not actually disbursed due to bureaucratic and other delays (e.g. CNI (2010: 11) noted that only 28 per cent of budget resources allocated for transport had been spent in recent years; O Globo (Nogueira 2015) reported that the government had executed only 65 per cent of transport logistics investments planned between 2003 and 2014, and that the port sector suffered the worst performance with under 47 per cent use of its budget allocation). Thus, port
bottlenecks remained in the absence of joint-up strategic thinking for logistics infrastructure and weak state capabilities and low institutional capacity to follow through on plans and decisions. By the mid-2000s, booming commodity exports and rising imports of manufactured and intermediate goods increased demand for port services and put much pressure on port authorities, operators and shippers to improve not only ports but transport and logistics infrastructure overall. Lacking public planning and resources, port investment mainly came from private operators and TUPs in the past decade. The first spate of investments had originated from private port operators awarded licences in public port terminals and TUPs that decided to expand their activities to handling third-party cargoes under Law 8630/1993. Thereafter, in 2004, the PT government created tax incentives to encourage further private sector investment in equipment to modernise ports (known as REPORTO). These incentives were later extended from 2008 to 2015. However, the pace of investment was dampened when Decree 6620/2008 created legal uncertainties, because of its insistence that the majority of a TUP’s cargo throughput must be proprietary cargo. Moreover, even when private firms signalled willingness to invest (both greenfield and expansion projects), they were often stymied by bureaucratic red tape and delays. These typically included queries about bidding documents and authorisation processes from the Federal Accounting Tribunal (TCU), problems with obtaining environmental impact clearances and difficulties in complying with urban zoning laws. Also, on-site landside investments of private terminal operators in ports were meaningless without complementary public investment in waterways (dredging) and land access (road and rail links to ports). Similarly, ports offering twenty-four-hour loading/unloading services were less effective in the absence of a twenty-four-hour presence of customs, inspection and other officials from government agencies. Thus, in the past decade, hardly a week went by without the media citing some local business or foreign investor lamenting a looming apagão logistica (logistics blackout). Even publications of state agencies such as BNDES and IPEA noted that Brazil was on the brink of a ‘logistics collapse’ (Tovar and Ferreira 2006: 219; Campos Neto et al. 2009). By the time President Rousseff took office in 2011, it was clear something needed to be done. Thus, in December 2012, Rousseff announced a provisional measure (MP595/2012) outlining the government’s plans to attract modernising investments in the country’s ports. She noted that ‘efficient ports are fundamental to Brazil’s development’ and that she hoped that the new measures would lead to ‘an explosion of investments’ in logistics infrastructure (Agência Paraná de Notícias 2012). Although MP595/2012 took a rather market-friendly approach, many businesspeople were taken aback at the way it was presented to them (i.e. with minimal prior consultation from their point of view). Unsurprisingly, labour unions and port administrations also balked at various proposals within the MP. After tough negotiations
and a record number of amendments and hours of discussion, Congress mostly gave in to the Executive’s demands (as discussed in Chapter 2). There were also many firms that quickly realised the gains they could make under the new regulatory regime and some expressed their approval enthusiastically (e.g. ‘a game changer’ according to Michel Donner; ‘music to my ears’ according to Eike Batista; ‘exceptional, spectacular, animating, challenging’ according to Carlos Alberto Bottarelli; these comments were made by businessmen with port investments as reported in various newspapers on the day of the announcement of MP595/2012). Others remained sceptical about implementation or unhappy with the outcome (most specially the fifty-three operators whose concessions predated the 1993 law, who were informed that their licences would not be renewed nor would they be given indemnities for recently undertaken investments). So, how did the new regulatory regime change investment conditions? First, Law 12,815/2013 cleared up legal ambiguities and specified the various ways in which the private sector could invest in port activities, including concessions, licences, adhesion contracts and authorisations. It sought to increase the transparency of bidding and authorisation processes. It specifically clarified the status of TUPs and freed any private investor to directly invest in building private terminals outside statutory port areas. TUP authorisation processes were also eased (both for initial investment as well as subsequent expansion). Second, new concessions and licenses would be awarded via auction, where the winning bid was the one that offered the largest throughput capacity for the lowest tariff (and not the highest concession fee to the federal government as in the past). Wilen Manteli, President of ABTP, immediately warned that this would be a complicated process that would require much ‘financial engineering’ (Pires and Cutait 2012). Third, the law sought to reinforce the authority of the OGMO over hiring labour for cargo-handling both dockside as well as on board ships, giving business more control over workers. The new regulations also consolidated the removal of dock workers/capatazia from the dock company’s staff registers. A key new feature was a guaranteed minimum monthly wage for OGMO-registered workers. Fourth, it re-centralised port policymaking by downgrading the CAP to that of a mere consultative body, suggesting a reversal of the decentralisation that was a feature of Law 8630/1993. While this unified conditions across the country, it lessened options for specific local responses and initiatives to shape investment decisions and boost interport competition. Fifth, although the dock companies retained their role as port authority and administration, the new regulations outlined measures to encourage professionalised management/reduced political interference and introduced clearer criteria to measure attainment of performance targets. Sixth, rather than improve investment conditions overall, some regulatory changes were at odds with business preferences and therefore unlikely to achieve the government’s aims of more investment (discussed later). Others simply seemed unlikely to be implemented
(even if desirable), a problem experienced under previous legislation as already discussed. The new regulatory regime also changed the institutional organisation of the port sector. SEP, a ministerial-level body attached to the president’s office, originally managed only maritime ports, but now also had responsibility for all types of port installations. ANTAQ, the independent regulatory agency, was integrated into SEP. Other port area services and authorities, such as customs, police, health and sanitation, etc., were organised under a single National Port Commission (CONAPORTOS) in the hope it would smoothen inter-agency coordination. The newly created National Pilot Commission was expected to work alongside the navy. However, SEP was kept outside MT during the PT governments, a point that was criticised by business because it made multimodal logistics planning (a crucial necessity to increase efficiency and reduce costs) more difficult. Unsurprisingly, a year after the new rules were announced, the CNI still identified Brazilian ports as ‘the principle bottleneck in our logistics chain’ (CNI 2014: 13) and warned that ‘the agenda for institutional modernisation has not been completed’ (CNI 2014: 9). As such, it presented presidential candidates with a detailed report on what still needed to be done to make Brazilian ports more efficient, competitive and fit to meet the service standards demanded by business. The report discussed six main recommendations for the consideration of the presidential candidates. These included (CNI 2014):
UÊ ˜ÃÕÀiʈ““i`ˆ>Ìiʈ“«i“i˜Ì>̈œ˜ÊœvÊÌ…iÊ>ÜÊÌœÊ>Ûœˆ`ÊÜ…>ÌÊ…>««i˜i`Ê under the previous law);
UÊ œÀÀiVÌÊÌ…iÊ…ˆÃÌœÀˆVÊ«ÀœLi“ÃÊœvÊÌ…iÊ`œVŽÊVœ“«>˜ˆiÃÊiëiVˆ>ÞÊw˜>˜Ving and over-politicisation);
UÊ -ÌÀi˜}Ì…i˜ÊÌ…iÊ}œÛiÀ˜>˜ViÊœvÊvi`iÀ>ÊÌÀ>˜Ã«œÀÌÊÃiVÌœÀʈ˜Ã̈ÌṎœ˜ÃÆ UÊ “«ÀœÛiÊÌ…iÊ«œÀÌÊÃiVÌœÀ½ÃÊ«>˜˜ˆ˜}ÊV>«>VˆÌÞÆ UÊ ˜Ìi}À>ÌiÊ “>˜>}i“i˜ÌÊ >˜`Ê vœÀ“Õ>̈œ˜Ê œvÊ «œˆVˆiÃÊ vœÀÊ «œÀÌÃÊ >˜`Ê
waterways; UÊ ,iˆ˜vœÀViÊ Ì…iÊ ÀœiÊ >˜`Ê vÕ˜V̈œ˜ÃÊ œvÊ Ì…iÊ /Ê ÌœÊ ˆ“«ÀœÛiÊ ÌÀ>˜Ã«œÀÌÊ
logistics.
