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Monday, 19 January 2015

New Brazilian port minister stirs investor uncertainty

New Brazilian port's minister Edinho Araujo New Brazilian port's minister Edinho Araujo

The appointment of the new Brazilian minister of ports, Edinho Araujo, at the start of this month has left many investors in the sector uncertain as they wait to see what the relatively inexperienced newcomer will deliver for the industry.

The replacement came as the recently re-elected Brazilian president Dilma Rousseff faces toughening pressure over corruption allegations to do with state-run energy firm Petrobas. Although a reshuffle is not uncommon, Rousseff faced added difficulties in finding a replacement for the outgoing port minister Cesar Borges due to the fact that as many as 40 politicians are potentially facing corruption charges in the wake of the scandal.

Petrobras employee, Paulo Roberto Costa and his associate, Alberto Yousseff, are currently plea bargaining to receive shorter sentences in return for the names of senior politicians believed to have been responsible for siphoning-off 3% of Petrobas’ contracts for party political funding.

Political positioning overrides port needs

During his brief tenure at the Secretaria de Portos (SEP) last year, Borges made significant progress in boosting both the profile and investor confidence in Brazil’s port sector. The recent turnaround is likely, at the very least, to delay some projects as many commentators felt Borges was well placed as head of the SEP, thanks to his previous experience as minister of Transport

Despite these strengths, Borges’ close ties with Rousseff have evidently served to hasten his departure. In contrast, Araujo is believed to be more interested in the political arena of the Brazilian Democratic Movement Party (PMDB) than a long term interest in port development and as such investors remain wary as to the policies this might engender.

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