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Brazil launches privatisation programme with port authority, Codesa

THE port authority for Espirito Santo, Codesa, is the first body that Brazil will privatise as part of a US$14.1 billion programme involving 57 assets including 14 airports and six port terminals.

Codesa runs the ports of Praia Mole and Vitoria, which is the home of the Terminal Vila Velha container facility run by Log-In Logistica, Brazil's last surviving container carrier.

Following China Merchants Port Holdings acquisition of its first terminal in Brazil with Terminal de Containeres de Paranagua (TCP) in early September, sources say "Chinese interests" are favourites to win the bidding for Codesa, IHS Media reported.

President Jose di Bella of the Association for Brazilian Ports and Terminals (ABTP), which represents 70 different port entities, supported the move from Brasilia saying that privatisation of Codesa will make it "more efficient, more agile and flexible."

"The performance of dock companies is usually slow, mainly because they are embedded in the bureaucratic process of a public company," he told local Brazilian media. "There is also the difficulty of raising funds because they depend on the central government. All this can be improved by privatisation."

Codesa was chosen as a guinea pig because of its relatively small size. While the government is working on privatising dredging at the country's largest port in Santos, Brasilia believes the wholesale privatisation of such a large port authority is for now too large and complex a process.

However, the small size that made Codesa attractive to Brasilia to first put on the auction block has raised doubts among some in the industry.

"There's not much to be privatised at Codesa, apart from the Vila Velha terminal. There is not much of a port area, and there is not enough cargo to justify a respectable company bidding and winning the concession," Rio de Janeiro-based consultant at the MA consultancy, Joao Emilio Freire, was quoted as saying.

Mr Freire, who until recently was executive director for the Commissao Portus, a confederation of Brazilian port associations and shipper and industry groups, said that the ports at Paranagua or Rio Grande would have been better choices because of their higher cargo volumes.

Terminal Vila Velha terminal last year handled 94,800 TEU, a decline of 4.5 per cent year on year. Traffic in the first half at the terminal was down slightly to 52,000 TEU from 52,900 TEU last year.