MercoPress. South Atlantic News Agency

Brazil signs bill expanding private sector participation in the clogged ports

Chief of staff Gleisi Hoffmann said 12bn dollars in investments are in the pipeline

Brazilian President Dilma Rousseff signed into law on Wednesday new regulations to make its ports more efficient and attract up to 12 billion dollars in investments as the country finally begins to tackle logistics bottlenecks hampering vast farm exports.

In effect soybean shipments, which typically are shipped through May, will be extended at least until July as a record crop from the world’s top producer clogs ports and roads.

The 12bn estimate is the value of planned private sector port projects already submitted to the government for approval, Rousseff's chief of staff Gleisi Hoffmann said at a media conference to announce last-minute changes to the ports law.

According to port operators soybean vessels have been waiting as much as 39 days to load at the country’s main port of Santos, and 55 days at the second-largest oilseed port of Paranagua. That compares with an average of 10 to 15 days a year ago for both ports.

The ports’ law makes investment more attractive by allowing private terminals run by commodities traders, for example, to handle cargo for other companies and no longer just the produce linked to their own activities, such as farming or mining.

Expanding private sector participation in Brazil's port operations will increase competition between port operators and result in lower charges for the handling of cargo, the government says.

Most of the new investments would be to develop facilities on green field sites outside, but near, established ports, the new regulations stipulate.

With the new law in place, Brazil will also auction leases that have expired at 52 areas in the vicinity of its biggest sea port, Santos, and in the northern state of Para by the year's end, Hoffmann said.

Leases at a further 107 areas at ports dotting Brazil's roughly 8.900 kilometres coastline would be auctioned off after January 2014, by which time the contractual terms would be finalized.

The government fought hard for several months to push through regulatory changes governing ports that it says are vital to boost efficiency and attract private investment as cargo volumes rise, leading to delays and soaring costs.

Brazil's highly competitive agriculture sector has been hampered by a spike in transport costs caused by a shortage of trucks and queues at ports.

Long-awaited investments in rail and waterways are still a few years off.

Hoffmann listed parts of the bill vetoed by Rousseff, including automatic renewal of long-standing concessions and a section that fixed the duration of concessions at between 20 and 50 years. A restriction excluding shipping companies from running port terminals in Brazil was also removed, Hoffman said.

Brazil is forecast to surpass the U.S. in the 2012-2013 crop year to become the world’s largest producer of the oilseed after a drought cut U.S. crop yields. Farmers in Brazil will harvest 83.5 million tons, compared with U.S. output of 82.1 million tons, the US Department of Agriculture advanced last month. China is the top buyer of soybeans from Brazil, according to Brazil’s Ministry of Agriculture.