Brazil Signs New Port Rules to Boost Investments; Port Concession Contracts Extended from 25 to 70 Years
In May, the Brazilian President Michel Temer signed new rules for the local port sector, which aim to “modernize” procedures for port investments, while providing investors a certain degree of “legal certainty.”
The new rules were signed through a government decree on May 10, and promise to “cut red tape” and bring new investments to the sector.
Under the terms of the new rules, existing port concessions can be repeatedly extended for up to 70 years.
Before the new law was signed, contracts used to last 25 years and could be extended for an additional 25 years.
“Among the main changes are the expansion of contract terms and more freedom to extend existing contracts, which will simplify the process of obtaining permissions and expanding private use terminals,” the Brazilian government said of the new rules at its English news site.
Brazil, whose economy has started to rebound, expects to provide some more certainty to investors.
“No one invests if there’s no legal certainty,” President Michel Temer said when signing the new decree.
While market analysts predict Brazil is on its way out of a two-year recession, the current political turmoil still weighs on Temer and his team.
Despite the one percent gross domestic product (GDP) growth reported in the first quarter (Q1) of this year, Temer has faced a number of accusations that could potentially oust him from power.
In May, Temer was secretly taped by a food company executive discussing a payoff for a once powerful politician jailed for corruption. JBS Chief Executive, Joesley Batista, made the secret tape as part of a plea bargain presented to prosecutors.
The tape unleashed a political crisis that has Temer facing corruption charges.
More recently, the Brazilian president was also accused of using the new port rules to benefit a company in the city of Santos, Brazil, which is home to Latin America’s busiest port.
On June 26, Brazil’s Attorney General of the Republic (PGR) asked the Brazilian Supreme Court, Supremo Tribunal Federal (STF), to investigate facts related to the new port rules, locally known as the “ports decree.”
PGR suspects President Michel Temer and his former adviser Rodrigo Rocha Loures used the new port rules for money laundering, as well as active and passive corruption purposes.
THE OTHER SIDE
While the new port rules expect to reduce bureaucracy for new and existing port concessions, stay on power could at least delay proposed reforms and hamper already approved measures.
Despite the increased scrutiny over Temer, the Brazilian president said recently during the G-20 summit in Hamburg, Germany, he was confident and “cool” about the outcome of on-going corruption charges involving his name.
When asked whether the existing probes involving alleged irregularities in the signing of the so-called ports decree could put the new rules at risk, the Brazilian Ministry of Transports, Ports and Civil Aviation, MTPA, said it followed, as usual, all needed steps before it became a new regulation.
MTPA said the new regulation was a result of a number of deliberations by a working group, which it managed.
Other entities involved in the discussions to draft the new rules included federal ports agency ANTAQ, and private sector entities, such as ABTP, ABRATEC, ABTL, ABTRA and ATP.
They stand, respectively, for: Brazilian Association of Port Terminals, Brazilian Association of Container Terminals of Public Use, Brazilian Association of Liquid Terminals, Brazilian Association of Terminals and Customs Enclosures, and the Brazilian Association of Private Port Terminals.
“It was 90 days of work and 30 meetings with the permanent follow-up of Brazil’s Attorney General Office (AGU) and the Internal Controlling of this ministry (MTPA),” the Brazilian government said.
According to the MTPA, at the end of this process, the working group presented a legal, technical report to Brazilian minister Mauricio Quintella Lessa aiming to de-bureaucratize, reduce risks, attract further investments, as well as to make processes simpler. Lessa also sent the proposed rules the Chief of Staff of the Presidency of the Republic for final approval.