Auction of three areas in the Port of Santos received five proposals

The three areas in the port of Santos (SP) that will be auctioned today received five proposals, has verified Valor. Two lots will be auctioned for cellulose, paper and general cargo handling and one for vegetable bulk. The auction is scheduled for 10am on the BM & FBovespa in Sao Paulo. It will win the contest who offers the highest granting amount. The exploitation period is 25 years.

Bidding will include the tenders opening, the bidders rating, and open outcry auction, if the lease receives two or more offers. If there is a tie, the decision will be by raffle. If a company submit higher bids for the two areas set aside for cellulose, it will have to choose one of them.

This will be the first auction of areas in public ports under the new Ports Law, of 2013. The lots are part of the 1st block of a package of 93 areas in several Brazilian ports, which will be leased until the end of 2016, according to the goal from the government.

The auction today comprises also the bid of a plot in Vila do Conde (PA) for grain movement. But the National Agency for Waterway Transportation (ANTAQ) withdrew the lot of the auction on Monday because there was no tender. The announcement will be reviewed and will enter in second stage of the 1st block, which will only comprise leases in Pará.

Market believes that the plot of Vila do Conde has potential, mainly due to the progress of agricultural production to the North. But the bid conditions undermined companies’ interest. The minimum capital of the company would exploit the area was considered too high: R$100.2 million. In addition, the winner would have to invest R$477.5 million to build the terminal and pay to the port administrator R$122,400 per month and R$0.31 per ton.

Before removing Vila do Conde, Secretaria dos Portos – SEP (Secretariat of Ports) estimated to raise US$1 billion with the granting of the four lots, which was considered by the market an exaggerated value. Experts have more conservative assessment, in which the three areas of Santos together should total no more than R$200 million.

There is a common criticism to the high disbursements of Santos lots. The government changed the criteria of the auction to the highest granting amount, but did not compensate for the fixed and variable costs to be paid by the Lessor. Thus, it turns the costs too much high for the terminals that will be within the public port, where the operating rules are stricter and costs higher than private use ports.

However, the port of Santos has differentials that maintain the attractiveness. Cellulose exports grew 8.9% in the year accumulated up to October, and cargo producers seek more space in the Santos pier to board. In the case of grains, the area may be the last in Santos intended for this purpose in the medium term.