Government sets minimum concession fee for Tecon Santos 10 at R$ 500 million

The Tecon Santos 10 Container Terminal will occupy 621.9 thousand m², with projected investment of R\$ 6.45 billion (Alexsander Ferraz/AT)

The Ministry of Ports and Airports (MPor) announced on Monday (12) a minimum concession fee of R\$ 500 million for the auction of the Tecon Santos 10 Container Terminal, located at the Saboó quay (STS10) in the Port of Santos. The amount will go to the coffers of the Santos Port Authority (APS). A Tribuna consulted experts on the matter, who believe the value could be higher if there were no restrictions in the bidding process, scheduled for the second half of March.

In addition, the National Secretariat of Ports signed the decision order approving the final modeling and forwarded the documents to the National Waterway Transport Agency (Antaq) for publication of the notice. According to MPor, this took place ahead of the internally established deadline, next Thursday.

Port consultant Rodrigo Paiva, director of Graf Infra Consulting, believes that setting the amount is aimed much more at ensuring a reasonable concession fee given the restrictions on participants defined by Antaq and later by the Federal Court of Accounts (TCU).

“Ideally, there would be broad participation by stakeholders, with post-auction conditions, which would lead to a higher bid amount without the need to impose a minimum concession fee. The parallel here is between supply and demand for any asset. The greater the demand, the higher the price. Once demand is restricted, the final price tends to be lower,” he explains.

MPor fully accepted the recommendations and determinations of the TCU, issued in December. The main one is that the auction be conducted in two stages, with restrictions on company participation in the first stage, as requested by Antaq.

The TCU went further and barred, in the initial phase, not only companies that already operate terminals in Santos, but all shipping lines (companies that own ship fleets). The second stage would only take place if the first were deserted, a virtually null possibility.

The measure prevents global shipping giants from participating, such as Denmark’s Maersk, Switzerland’s MSC, France’s CMA CGM and China’s state-owned Cosco. On the other hand, it benefits, with less competition, companies such as the Philippines-based ICTSI and Brazil’s JBS Terminais.

“This will depend heavily on the participants (regarding how high the amount could reach). As there are imposed restrictions and technical qualification requirements, the number tends to be smaller, reducing bids. Despite this, it is a highly relevant asset. I believe the minimum expected is R\$ 1 billion, depending on the number of competitors,” Paiva estimates.

Impacts and limitations

Port consultant Luis Claudio Montenegro assesses that, given the magnitude of the terminal, the amount is far from replacing the potential of broad competition, even as a minimum price. “Based on our estimates, this is quite clear. Setting a minimum concession fee at this level disregards a series of elements that will necessarily be priced by bidders in the auction,” he says.

According to the consultant, there are two distinct types of impact. “The first is direct and immediate: the loss of resources in the auction itself. In a recent survey, we estimated that excluding several of the main global operators could generate losses, under very conservative values, of around R\$ 1.5 billion for the government. The second is even more relevant: the increased risk of a suboptimal choice. Competition is reduced and the likelihood increases of a winner that lacks economic incentives to anticipate investments or accelerate capacity expansion,” he adds.

The minimum value represents legal certainty, Montenegro argues. “And that has no price. Without clear, stable and predictable rules, any figure set as a minimum concession fee becomes an artificial value that does not reflect the asset’s real potential nor maximize the public interest,” he says. “Legal certainty is what ensures genuine competition, timely investments and efficient decisions,” the port consultant maintains.

The asset

Tecon Santos 10 will be the largest container terminal in South America. It will occupy 621.9 thousand square meters (m²), with capacity for 3.25 million TEU (twenty-foot equivalent units) per year, in addition to 91 thousand tons of general cargo. With projected investments of R\$ 6.45 billion in the terminal, the contract term will be 25 years, with operations expected to begin in 2026.

The megaterminal is expected to enable the relocation of the Giusfredo Santini Passenger Terminal, operated by Concais, from Outeirinhos to Valongo. For this purpose, the future lessee will be required to build the slab for installation of the cruise terminal.