Port of Santos channel: concession model may deter interested companies, specialist warns

Model could involve up to R\$ 23.4 billion over a 25-year contract period (Alexsander Ferraz/AT)

The concession model for the Port of Santos navigation channel, currently under public consultation, may discourage potential bidders due to the level of risk imposed on the future concessionaire. The warning comes from DEME Brasil CEO Disney Barroca Neto. The Belgian group’s company won the country's first port access channel concession in Paranaguá (PR).

According to him, the model proposed for Santos still requires further technical refinement and includes financial and operational requirements considered demanding for the private sector.

DEME has operated in Brazil since 2006 through Dragabras. In October last year, the company won the auction for the Paranaguá access channel concession in partnership with FTSpar. The new operating company, called Paranaguá Port Channel Company, will be owned 70% by DEME and 30% by its local partner. The concession will run for 25 years.

Barroca highlighted that, in the case of Paranaguá, the concessionaire is not directly compensated for dredging activities but rather through increased port throughput, which, according to him, aligns the interests of the company, the port authority, and users.

“If I dredge extensively, dredge very little, or do not dredge at all, it does not change my revenue profile. What generates revenue for me is the cargo throughput volume of the Port of Paranaguá.”

According to the executive, the Paranaguá model was supported by a robust technical foundation and years of accumulated studies, a situation that, in his view, is not replicated in Santos.

“From a technical studies standpoint, the Port of Santos did not have as many prior studies available for those responsible for developing this model. That significantly increases the risk profile.”

Another point of criticism concerns the proposed financial model.

“The level of revenue requirements and concession fees being demanded at the Port of Santos are very high”, he said. “You have to pay R\$ 200 million per year to the Port Authority, in addition to the variable concession fee. When you factor in these figures, the contract already starts at approximately R\$ 450 million.”

The executive also stated that some of the risks included in the contractual risk allocation matrix are a concern for the market, including those related to future channel sedimentation and even potential maritime accidents.

“There are several examples, but these are risks that the concessionaire would have to assume. They are uncertain risks imposed on top of a revenue profile already marked by a very significant revenue commitment.”

DEME has not yet decided whether it will participate in the future bidding process in Santos.

“Today, I am not in a position to say whether we would be interested.”