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Friday, 17 June 2016

Brazil scraps port ministry and Reais2.8 billion of port concessions are delayed at least a month

With an interim president – Michel Temer - now in place in Brazil, following the continuing impeachment process against Dilma Rousseff, the port and transport sectors in the South American country are now undergoing a major shake-up.

The long mooted plan to reduce the number of ministries in Brazil from 39 down to a more manageable 24 is now moving inexorably forward and a decision has already been made by Brasilia that the Special Ports Ministry (SEP) will be subsumed, along with Civil Aviation, under the umbrella of an expanded Transport Ministry.

One of the aims is to cut costs of expensive central government but one of the consequences is that the next round of port concessions, scheduled for Bovespa (the Sao Paulo Stock Exchange) on June 5, has been delayed by “at least a month” and possibly longer. Five of the six – worth a total of Reais2.8billion of investment when combined – were delayed two weeks before the due date and one in Santarem, for a grain terminal worth Reais600 million, was cancelled, embarrassingly, just one day before.

A veteran port consultant who has worked for the government and in the private sector for more than 40 years said that it was “ridiculous” for the Ministry of Transport to even think about carrying out a new tender before things settle down and international investors are assured their investments will be safe” from future changes of legislation and governments.

“For sure it was a good decision to delay the tenders as there is not enough interest in them right now with so many government changes,” said the consultant on condition of anonymity. “I think it will only be postponed for about a month to six weeks because the new government, which has promised to be Pro-privatisation, must be seen to be moving forward on this front. If it delays longer than this then its credibility will be questioned. I also think there may be some changes in the Edital [details of tender process and concession agreements] for the third tranche of concessions and that they will be more attractive to foreign investors.”

Brazil-port-minister- 3816The decision to scrap the SEP and bring the Ministries of Ports and Aviation under the auspices of newly appointed Transport Minister, Mauricio Quintella Lessa, and mean that Mauricio Muniz Barreto de Carvalho, the current ports minister will probably go down in history as one of the shortest serving ministers ever.

He took over from Helder Barbalho, who resigned from President Rousseff’s government on Wednesday April 20, and lost his post last Thursday (May 12), ratcheting up a total of only 15 full working days in the job: possibly a world record short duration!

Barbalho himself had only been in the post since October, 2015, but, after a shaky start, he had picked up the main requirements and was considered by many in the port sector to be doing a “reasonable” job.

The SEP was first set up in July, 2007 and its first minister, Pedro Brito, was considered an eventual success. Since then some port ministers have failed and some have done well in boosting the port sector which needs boosting right now as the only way Brazil can extricate itself from its current recession is to be competitive and export profusely.

Quintella has been a Federal Deputy of the Partido do Republica (or PR party) for the state of Alagoas, in the northeast, for the past 10 years and comes to the Transport Ministry with no experience of the sector: most of his posts in Alagoas were in the Education sector, and he has been investigated there for financial irregularities.

However, his party and Quintella voted for the impeachment of Dilma Rousseff and so the market friendly Temer rewarded him with the Transport Ministry post. “With regard to infrastructure we will make a great effort to grant more concessions and privatize as much as possible,” he told the Brazilian newspaper O Globo.

Several leading lights in the Brazilian port sector are aghast that yet another “politico” with no port, or even transport sector experience, has taken over the realms of power and, more importantly, access to the coffers for infrastructure spending.

Many respected voices, such as the veteran Wilen Manteli, the president of the Brazilian Association of Ports and Terminals (ABTP) would prefer if a “Technico”, or government technocrat, was in charge, or at least a politician with some port and transport sector experience.

“At ABTP we realise that Brasilia must reduce the number of ministries but there are other options that would allow us to keep SEP,” Manteli said, “The port sector is so very important for foreign trade and for the economy. This is not the way. All we can hope for now is that the new minister at least allows the port sector some autonomy.”

Press release 15 June 2016


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