water transportation and ports docas da bahia (codeba) public federal salvador aratu ilhéus...

Water Transportation and Ports


Operating leases Of pOrt areas and facilities

The 1988 Brazilian Constitution stipulates that the Government should explore public ports directly or through

concessions and permissions. By the year 2010 there were 34 public sea ports: 18 administered by Companhias

Docas on behalf of the Government, 15 ports delegated to states and municipalities and 1 public port granted to

the private sector.

PUBLIC PORTS IN BRAZIL

Porto de Macapá

Porto de Santarém

Porto de Manaus

Porto de BelémPorto de Vila do CondePorto de ItaquiPorto de FortalezaPorto de Areia BrancaPorto de NatalPorto de CabedeloPorto de RecifePorto de SuapePorto de MaceióPorto de SalvadorPorto de AratuPorto de IlhéusPorto de Barra do RiachoPorto de Barra de VitóriaPorto de FornoPorto de NiteróiPorto do Rio de JaneiroPorto de ItaguaíPorto de Angra dos ReisPorto de São SebastiãoPorto de SantosPorto de AntoninaPorto de ParanaguáPorto de São Francisco do SulPorto de ItajaíPorto de Imbituba

Porto de EstrelaPorto de Porto Alegre

Porto de PelotasPorto de Rio Grande

AM

MT

GO

TO

BA

PI

MAPA

AP

RR

RO

AC

MGES

SP

MS

PR

RS

SC

DF

CE RNPB

PE

AM

MT

GO

TO

BA

PI

MAPA

AP

RR

RO

AC

MGES

SP

MS

PR

RS

SC

RJRJ

DF

CE RNPB

PE

SESEALAL

Port facilities and areas in a public port may be explored by third parties for public services of cargo handling

and storage through leasing, preceded by bidding. The evaluation criterion is the highest amount. Procedures and

requirements to be followed are set forth in Law nº 8630/1993, in the decree that regulates this law and in rules from

the regulatory agency - the National Water Transport Agency (Antaq).

The purpose of this audit

Public Ports are important for the economic development of Brazil. In 2010, according to Antaq’s data, 288.8

million tons of goods were handled in the leased areas of the ports.

Port leasing is a modality of privatization of public service, according to the Law of the National Privatization

Program (Law nº 8031/1990, amended by Law nº 9491/1997). The Federal Government must ensure that public

services rendered in the leased areas are adequate to users, through the regulatory function.

The Brazilian Court of Audit (TCU), supported by the Federal Constitution, supervises Antaq’s management and

performance in services regulation and in infrastructure granting. The monitoring of port areas leasing processes is

established in TCU’s Internal Rule nº 27/1998, due to Decision nº 669/1999 TCU – Plenary.


Brazilian Court of Audit • www.tcu.gov.br • 1st Secretariat for Oversight of Privatization and Regulation • [email protected] • Phone: +55-61-33167384 • Fax:+55-61-3316-7545.

For further information, visit www.tcu.gov.br/controleregulacao

All procedures involved in the lease are reviewed by TCU, from feasibility studies that support bid technical and

economic criteria to contract execution.

TCU contributes to the regularity and legality of the port leasings. The oversight verifies whether values and

content of contracts comply current economic context and with the law. The return of the private capital invested

must be fair, the provision of adequate service to users should be ensured, the valuation of the public asset should

be appropriate and public interest should be observed. The objective is to collaborate with legal and regulatory

stability in order to reduce contract shortcomings that may motivate economic and financial rebalances or contract

terminations, with payment of compensation by the Government.

TCU monitoring of recent leasing

Vehicle Terminal of the Port of SantosJudgement TCU No 447/2009-Plenary session - 03/18/2009

Judgement TCU No 1.423/2009-Plenary session - 07/01/2009Rapporteur: Minister Walton Rodrigues

Terminal of Grains in Bulk on the Left Bank of the Port of Santos

Judgement TCU No 2.151/2009-Plenary session - 06/16/2009

Judgement TCU No 1.107/2010-Plenary session - 05/19/2010Rapporteur: Minister Raimundo Carreiro

Terminal of Liquid Substances in Bulk of the Island of Barnabé in the Port of Santos

Judgement TCU No 883/2010-Plenary session - 04/28/2010


Sugar Terminal at the Port of SuapeJudgement TCU No 3.145/2010-Plenary session - 11/24/2010


Fertilizers and Animal Food Terminal at the Port of Imbituba

Judgement TCU No 3.249/2010-Plenary session - 12/01/2010


Terminal de Grãos do Porto de ItaquiJudgement TCU No 2.073/2011-Plenary session - 08/10/2011

Judgement TCU No 2.847/2011-Plenary session - 10/25/2011Rapporteur: Minister José Múcio

Main findings

• absence of rationale and data source indication in financial and economic feasibility studies;

• use of simple average of past operations to project future cargo operations growth rate;

• calculation of the weighted average cost of capital using outdated values;

• remuneration of leases established without considering the nature of the cargo handled, which creates

distortions and inefficiencies from charging uniform values over differentiated services;

• lack of studies and assessments regarding market concentration risk in the ports as a result of leased areas;

• lack of studies of mechanisms to encourage competition in the leasing process;

• lack of expropriated assets equity valuation and absence of presentation of values data source;

• notices and contract drafts do not comply with various requirements of Law nº 8666/1993, Law nº 8630/1993,

Decree nº 66 620/2008 and Antaq’s Resolution nº 55/2002. It was observed lack of requirements regarding

services quality, lessees obligations, contract amendments, and areas expansion provisions It was also

founded inaccuracies regarding financial economic indicators calculations enabling bidders.


BRAZILIAN PORTS AUDIT

Between April 2008 and May 2009, the Brazilian Court of Audit (TCU) conducted a performance audit in Brazil’s

main ports. Due to its economic relevance, the issue was included among those that receive priority treatment in

TCU, the so-called Theme of Greater Significance (TMS).

TCU evaluated barriers to the expansion and modernization of the port infrastructure segment, from the

perspective of attracting investments in four aspects: 1 - port planning; 2 - financial sustainability of port authorities;

3 - process of port leasing; 4 - competition in the port sector;

The audit was carried out in 19 ports located in 13 states:

Port Authority Type of Administration Audited Port

Companhia Docas de São Paulo (Codesp) Public Federal Santos

Companhia Docas do Espírito Santo (Codesa) Public Federal Vitória

Companhia Docas Ceará (CDC) Public Federal Fortaleza

Companhia Docas do Rio de Janeiro (CDRJ) Public FederalRio de Janeiro

Itaguaí

Companhia Docas da Bahia (Codeba) Public Federal

Salvador

Aratu

Ilhéus

Companhia Docas do Pará (CDP) Public FederalVila do Conde

Santarém

Empresa Pública Estadual Suape (Complexo Industrial Portuário) Public State (Pernambuco) Suape

Porto de Recife S/A Public State (Pernambuco) Recife

Empresa Maranhense de Administração Portuária (Emap) Public State (Maranhão) Itaqui

Superintendência de Portos do Rio Grande do Sul (SUPRG) Public State (do Rio Grande do Sul) Rio Grande

Companhia Docas de Imbituba (CDI) Concession to private sector Imbituba

Superintendência do Porto de Itajaí Public Municipal (Itajaí/SC) Itajaí

Administração dos Portos de Paranaguá e Antonina (Appa) Public State (Paraná) Paranaguá

Companhia Docas de Santana (CDSA) Public Municipal (Santana/AP) Santana

Sociedade de Navegação, Portos e Hidrovias (SNPH) Public State (Amazonas) Manaus

Source: TMS ports

Main findings

• There is no national public policy for the sector. The expansion and modernization strategies of the segment

are designed and implemented based on regional realities, not on federal facts;

• There is no integration of port policies with other transport modes, since the National Council for Integration

of Transport Policies (Conit), established in 2001 to propose national policies for integration of different mo-

des, has not yet ruled the issue;

• Development and Zoning Plans for Ports (PDZ) and the Leasing Programs (PA) were outdated and did not

support the management of audited ports;

• Low level of corporate governance, with lack of control in management and, consequently, inefficient admi-

nistration of revenues;

• Lack of use of methodology for costs appropriation. Fees charged were not calculated to cover costs, affec-




ting the financing of land and waterway infrastructure;

• Lack of monitoring amounts charged by lessees, lack of parameters to assess contracts economic financial

balance and lack of productivity gains sharing with users;

• Evidence that the economic and financial regulation is based on assumptions of perfect competition, in oppo-

sition to evidences of entrance barriers and imperfect competition. This causes long waiting time in container

terminals and price increasing over inflation in almost every port between 2001 and 2008.

TCU Deliberations

Decision nº 1904/2009-Plenary, which dealt with the planning of the sector and the financial sustainability of

dock companies, determined:

• To the Special Secretariat of Ports (SEP):

1. to develop rules for the regulation of PDZ, in order to have greater utility and standardization, as well as to

guide port authorities in the promotion of leasing programs;

2. to promote financial sanitation, professionalize management and improve corporate governance of port

authorities.

• To the National Water Transport Agency (Antaq):

1. To establish clear rules for reviewing and readjusting port tariffs based on studies of port administration

costs, providing mechanisms to share with users the benefits originated from possible increases in

efficiency, considering the tariff mode and the economic and financial balance of port administrations.

• To SEP and to Antaq:

1. To jointly draw up regulatory mechanisms that allow the implementation of price and tariff systems based

on cost centers and that encourage the pursuit of operational efficiency by port administrations.

• To the Ministry of Transport (MT)

1. To start Conit’s works.

Decision nº 2896/2009-Plenary, which dealt with the leasing process and competition in the port sector,

determined:

• To SEP and Antaq:

1. to identify all operating contracts, or any other instruments designed to allow the handling and storage of

cargo by third parties that may not have had expected public bid procedure;

2. to regulate procedures designed to ensure the economic and financial balance of leasing contracts;

3. to promote studies to enable the identification of elements determining various markets competitive

conditions in the port sector;

4. to evaluate convenience and opportunity of (i) granting to port authorities the right to develop their own

feasibility studies, (ii) regulating cases where it is necessary to review the type of cargo specified in the

leasing contract, and (iii) evaluating the relevance of establishing different parameters and methodologies

for technical, economic and financial feasibility studies in leasing for handling non-consolidated cargo, in

new business or sporadic demands.

Judgment TCU No 1.904/2009-Plenary session - 08/26/2009

Judgment TCU No 2.896/2009-Plenary session - 12/01/2009Rapporteur: Minister Walton Rodrigues


SeaportS

The Brazilian Court of Audit (TCU) oversees the management and performance of the National Water Transport

Agency (Antaq) in order to verify the legality, efficiency, effectiveness and economy.

TCU monitors and audits leasing process of operational areas and facilities in public ports. This monitoring

comprehends from feasibility studies supporting bidding process up to contracts management, pursuant to Internal

Rule nº 27/98 TCU. Since Antaq’s creation, TCU has already intervened in the leasing processes of the Ports of

Santos, Imbituba, Itaguai, Itaqui and Suape.

In addition to these processes, TCU also audits other privatization and regulation actions on ports sector, such

as granting permission to use private terminals, managing consequences of changing areas and objects of leasing

contracts signed with the Government and solving disputes from legal framework interpretation.

TCU’s purpose on controlling port sector regulation is to contribute public administration improvement, to verify

project’s economic feasibility studies consistency and to assess administrative actions in compliance with laws and

regulatory arrangements, aiming to protect public interest.

The seaport industry

In 2010, the seaport sector handled approximately 834 million tons and drained more than 90% of Brazilian

exports. In currency terms, the average percentage handled in past years 80% of the total collected from exports.

BRAZILIAN EXPORTS BY MODE OF TRANSPORTATION

Source: Ministry of Industry Development and Foreign Trade (MDIC)




The handling of cargo and passengers is carried out in public or private structures with the following characteristics:

Public Ports or Organized Ports

• Directly or indirectly administered by the Government. The indirect administration is performed by means of a concession to a private company or delegation to states and municipalities

• Areas and facilities leased for handling and storage of third parties cargo.

Private Use Terminals (TUP)

• Exclusive TUP – authorized by the Government for handling cargo of the terminal’s owner;

• Mixed TUP – authorized by the Government for handling own and third parties’ cargo.

• Tourism TUP – authorized by the Government for handling passengers.

In 2010, there were 34 public seaports, 18 administered by the Government through state companies called

“Companhias Docas”; 15 were delegated to states and municipalities and one, the Port of Imbituba, was granted

to a private company.

In 2010, according to Antaq, 118 private terminals handled cargo. Cargo handling in public ports was approximately

289 million tons of goods, while private terminals handled about 545 million tons.

CARGO HANDLED IN PUBLIC PORTS AND IN PRIVATE TERMINALS IN 2010

Nature of Cargo Public Ports (ton) Private Terminals (ton)

Solid in Bulk 167,379,535 338,507,555

Liquid in Bulk 41,998,955 166,458,654

General Cargo 79,418,837 40,119,259

TOTAL 288,797,328 545,085,468

Source: Statistics Yearbook Antaq-2010

Legal framework and institutions

Brazilian ports were centrally managed by Empresa de Portos do Brasil SA (Portobrás) until 1990, when it was

extinguished. With the implementation of the National Privatization Program (PND) and the reform of the port sector,

motivated by the Port Modernization Law (Law nº 8630/93), the private sector began to take place in the operation

of the Brazilian port infrastructure through leases of areas at public ports and the installation of private terminals.

The Government, however, remained as owner and licensor of the infrastructure of public ports.

Law nº 8630/93 established concepts and rules for organized ports and private terminals. Law nº 9277/1996

regulates the delegation of public ports, through agreements to states and municipalities. Ports and terminals

should also comply with Decree nº 6620/2008 and Antaq’s rules such as Resolution nº 55/2002, which deals with

the leasing of public areas in ports and Resolution nº 1660/2010, which deals with private terminals.

At the institutional level, the Special Secretariat of Ports (SEP), linked to the Presidency of the Republic, formulates

policies and guidelines for ports and seaport terminals development and promotion. Antaq regulates and supervises

provision of public water transportation and exploration of federal waterway and port infrastructure. It assures

access and use equality, and users’ rights, as well as fosters competition among providers.

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