Which are the key ports in your jurisdiction and what sort of facilities do they comprise? What is the primary purpose of the ports?
There are 175 port installations in Brazil, consisting of about 32 public ports and 143 private ports, including maritime and river ports. The key public port in Brazil, based on the volume of cargo transported, is Porto de Santos (Santos Port) located in São Paulo state.
Santos Port is by far the largest public port in Brazil, responsible for around 30 per cent of all public port activity in the country. It is estimated that annually more than US$6 billion of goods and in excess of 129 million tons of cargo pass through Santos Port in export, import and cabotage trade. Santos Port is the main port of receipt for imports and exports, acting as a hub for the other Brazilian ports. For this reason, Santos Port moves goods related to all sectors of the Brazilian economy, and has facilities for general cargo, containers, liquids and oil. Because of the structure of the Brazilian economy, most of the goods exported are related to agribusiness and oil.
Describe any port reform that has been undertaken over the past few decades and the principal port model or models in your jurisdiction.
Law No. 12,815 (Law on Ports) was enacted in 2013, aiming to increase private investment in Brazilian ports, which is essential to tackle one of the country’s most prominent logistical bottlenecks. It was considered to be a turning point in terms of growth of the industry in Brazil. The law was further regulated by Decree No. 8,033, dated 28 June 2013, and the National Agency for Waterway Transportation (ANTAQ) Resolution No. 20/2018.
Additionally, the new Port Regulatory Framework has changed the institutional arrangement of the port sector, which has also been affected by the administrative restructuring promoted by the federal government in 2016. The Ministry of Transportation, Ports and Civil Aviation (MTPAC) has been made responsible for policy decisions, which now encompass lake and waterway ports. It is also responsible for licensing rights and coordinating the planning activities of the port sector. ANTAQ is now linked to MTPAC, and is in charge of regulation and fiscalisation. It directly regulates and oversees authorisation, leasing and concession contracts, besides working as an intermediary in delegation agreements. It is also responsible for carrying out the bidding procedures for concessions.
On 8 March 2017, Decree No. 9,048 was enacted, introducing several changes to port regulations in Brazil in a further attempt to foster investments in the port sector. The new rules will provide more legal certainty and protection to investors, making concessions and leases more flexible and simplifying the processes for making additional investments, obtaining permissions and expanding private-use terminals.
Owing to a government effort to reduce the number of ministries and improve the administration’s cost efficiency, MTPAC has taken over the legal attributions of the Secretariat for Ports (SEP/PR). In this regard, the newly created National Secretariat of Ports shall have jurisdiction over areas formerly covered by the SEP/PR and assist MTPAC in developing the port industry. It is also charged with the oversight of additional port operations, such as dredging services.
State development policy
Is there an overall state policy for the development of ports in your jurisdiction?
Yes. The Brazilian government has identified the development of the ports as a priority. Therefore, since the enactment of the Law on Ports, the government has developed a National Plan for Port Logistics (PNPL), which aims to identify the actions required to improve the infrastructure and efficiency of Brazilian ports.
From the PNPL, the government has developed a master plan for each public port to guide the investments and improvements necessary for each area and a development and zoning plan to coordinate the rational expansion of each port’s area. Further, the government has issued the general concessions plan, which identifies the strategic new ports and terminals to be licensed.
In relation to investments in particular, on 9 June 2015 the Brazilian federal government announced a new stage in the Programme of Investment in Logistics (PIL). The PIL estimates that there will be around 37.4 billion reais of investments in ports. From this total, around 11.9 billion reais should be allocated to new leasing of port areas, 14.7 billion reais to 63 new private terminals and 10.8 billion to the renewal of current leases of port areas.
In addition, on 12 May 2016 the Brazilian federal government launched the Investment Partnership Program (PPI), to expand and strengthen the state’s partnership with the private sector through the implementation of investment policies in infrastructure projects and other privatisation measures. Since the creation of the PPI, several business ventures have benefited from the programme, among which 17 port-related projects have been qualified as national priority. MTPAC estimates that with the new changes made to port regulations and the favouring of private investment policies there will be around 40 billion reais of investments in the port sector over the next 25 years.
What ‘green port’ principles are proposed or required for ports and terminals in your jurisdiction?
Brazil adopts most ‘green port’ principles, including:
- responsibility of the polluter;
- mitigation of impacts in the surrounding community; and
Those principles result in requirements and obligations to adopt and implement policies that are included in the environmental licensing. These are mostly related to:
- atmosphere emissions;
- residue production and disposal;
- impact on wildlife;
- development of social actions; and
- economic development of the surroundings.
In addition, for ports already licensed, the government has enacted the Federal Programme to Support Environmental Management and Settlement in Ports, aiming to bring those ports built prior to environmental licensing up-to-date in relation to the adoption of such principles.
Moreover, ANTAQ has developed the Aqua-Portos Certification, which is a port certification project that aims to certify ports that are in accordance with the most up-to-date environmental requirements, precautions and measures. It aims to assess the level of environmental performance of Brazilian ports.
It is also important to highlight that the Brazilian navy establishes requirements for the prevention of pollution by vessels in Brazilian jurisdictional waters, with regard to ballast water management, applicable to all vessels, national or foreign, equipped with ballast water tanks or basins, which use Brazilian ports and terminals.
Legislative framework and regulation
Is there a legislative framework for port development or operations in your jurisdiction?
The legislative framework regarding the development and operation of the port industry is mainly provided by Law No. 12,815/2013, which deals with the direct and indirect exploration by the Federal Union of ports and port installations, as well as with the activities of port operators, and by Decree No. 8,033, which regulates Law No. 12,815/2013. There are also specific regulations concerning the construction and operation of port installations. Among those, we highlight the construction and exploration of private use terminals provided by ANTAQ’s Normative Resolution No. 20/2018. Furthermore, ANTAQ’s Normative Resolution No. 07/2016 establishes the rules for exploring areas and port installations under the management of the port authority in public ports.
The Federal Constitution determines that ports are under federal government jurisdiction.
Additionally, any concession, lien or public-private partnership (PPP) of ports and port installations is regulated by the state. Law No. 11,079/2004 poses no restriction on giving a port concession to a PPP. However, despite current meetings between the private and public sector, PPPs are not common in the port sector.
Is there a regulatory authority for each port or for all ports in your jurisdiction?
All ports in Brazil are under the surveillance of the same regulatory bodies, ANTAQ and MTPAC. In addition, each public port is overseen by a port authority (the docks companies) and all activities undertaken in Brazilian jurisdictional waters (including those of ports and vessels) are under the aegis of the Brazilian Maritime Authority, which is represented by the Directorate of Ports and Coasts (DPC) and the Port Captaincy, especially with regard to the safety of maritime traffic, the prevention of water pollution and the safeguarding of human life at sea.
What are the key competences and powers of the port regulatory authority in your jurisdiction?
ANTAQ, as the port regulatory authority in Brazil, has the following competences and powers:
- regulation of the port industry through the production of rules;
- assessment and concession of authorisations to have a port or to be a port operator;
- surveillance of port operations and activities of the agents;
- elaboration of studies and plans; and
- supervision of agreements.
ANTAQ has also implemented the Annual Surveillance Plan, which aims to enhance surveillance of the operation and administration of public ports and of port installations for private use.
How is a harbourmaster for a port in your jurisdiction appointed?
In Brazil, the harbourmaster, known as the Capitão dos Portos, is a navy official responsible for and with maritime authority over a specific port or respective coastal zone, being responsible for safety in navigation and in the use of ports and port installations. The harbourmaster also has police powers, and is able to arrest criminals within its area of jurisdiction.
The harbourmaster is appointed by the commander of each naval district in Brazil.
Are ports in your jurisdiction subject to specific national competition rules?
Law No. 12,815/2013 adopted as one of its principles and guidelines the need to provide incentives for competition, in view of the participation of the private sector in the industry. Furthermore, ports are subject to general competition rules established under Law No. 12,529/2011. As a matter of fact, the Administrative Council for Economic Defence, a Brazilian federal agency that aims to guide, prevent and investigate abuses of economic power and acts within the sphere of competition rules, has some administrative investigative cases concerning competition rules in the port industry, such as those related to the taxes of release of containers from customs areas charged by operators of terminals.
In this regard, Law No. 10,233/2001 also provides for competition guidelines in the industry.
Lastly, ANTAQ’s Regulatory Agenda for the 2018-2019 biennium indicates among the subjects expected to be regulated the improvement of competitive analysis of regulated markets.
Are there regulations in relation to the tariffs that are imposed on ports and terminals users in your jurisdictions and how are tariffs collected?
There are also some standards to be followed when fixing tariffs for public and private terminals, related to safety, affordability, regularity and punctuality, among other things. However, the general rule is that for private terminals the pricing is as unrestricted as any other private enterprise.
For public ports, on the other hand, Law No. 12,815/2013 provides that the criteria and value of tariffs must be contemplated in concession and lease agreements in relation to public ports.
Currently, there are some discussions related to readjustment of the prices included in the concession and lease agreements, and ANTAQ studies to issue a special regulation in this regard.
Are there restrictions relating to the currency applied to the tariffs or to any fees that are payable by a port operator to the government or port authority? Are any specific currency conditions imposed on port operators more generally?
As a general rule, Brazilian currency is imposed in any transactions between Brazilian entities or for payments to be carried out in Brazil. There are few exceptions to this rule, but for payments to be made by a port operator (Brazilian entity) to the government or port authority, Brazilian currency shall apply. Furthermore, as per Law No. 10,233/2001, ANTAQ has the competence for reviewing or readjusting the port tariffs, which must be previously informed to the Ministry of Finance.
Public service obligations
Does the state have any public service obligations in relation to port access or services? Can it satisfy these obligations through a contract with a private party?
Yes. The federal government is obliged by the Federal Constitution to explore port facilities and to provide port services, as well as railways and interstate roads. The state governments are responsible for intermunicipal and local roads. This can be done directly by the federal government or indirectly, through concessions or liens to private entities. However, it is usual that the more immediate port access-related obligations are transferred to the private sector through environmental licensing.
Can a state entity enter into a joint venture with a port operator for the development or operation of a port in your jurisdiction? Is the state’s stake in the venture subject to any percentage threshold?
We understand that a PPP for the development of port operators would be possible under Brazilian law. Although there are no specific provisions related to the port sector, we understand that Law No. 11,079/2004, which regulates the possibility of the government incorporating a special purpose vehicle for the development of activities, would apply also to port activities without any specific percentage threshold for the state’s stake in the joint venture.
Are there restrictions on foreign participation in port projects?
Any company incorporated and with headquarters abroad needs a presidential authorisation to operate in Brazil. However, there are specific provisions in the regulations that restrict the operation of ports and application to build private ports to companies incorporated under Brazilian law. It is important to clarify that there are no restrictions on foreign capital for companies incorporated in Brazil to act in the port sector.
Public procurement and PPP
Is the legislation governing procurement and PPP general or specific?
We have general legislation regulating both government procurement and PPP. The specific law dealing with public bids and purchases is Law No. 8,666/1993, while Federal Law No. 11,079/2004 regulates PPPs. Furthermore, there are laws governing particular cases, such as Federal Law No. 8,987/1995 on concessions for public services.
The PPI, mentioned above, is regulated by Law No. 13,334/16, and is destined to expand and strengthen the state’s partnership with the private sector through the implementation of investment policies in infrastructure projects and other privatisation measures.
May the government or relevant port authority consider proposals for port privatisation/PPP other than as part of a formal tender?
No. All proposals for public ports are to be officially sent (formal tender) within a bid process. Hence, any PPP offer must also be contemplated through a formal tender.
However, procedures to issue authorisations to run a private port are not subject to a bidding process, although a public announcement is part of the process.
Joint venture and concession criteria
What criteria are considered when awarding award port concessions and port joint venture agreements?
In general, bids for the lease of areas in public ports take into account two of the following criteria, to be informed in the bid documents:
- capacity of the installations;
- lowest price to the end customer;
- efficiency in the time for each operation;
- investment to be carried out by the interested party;
- lowest possible undertaking by the government;
- best technical proposal; and
- highest licence value.
Usually, the overall capacity to be installed in the port and the lowest price to be offered to the end customer are the main elements for any bid. However, all of those participating in a bid will be assessed in terms of competence and qualification for the project.
Is there a model PPP agreement that is used for port projects? To what extent can the public body deviate from its terms?
Public ports and public port installations are to be developed through lease agreements and enrolment of port operators, as defined by Law No. 12,815/2013, while private terminals are built and developed by private or public entities through an authorisation issued by ANTAQ and MTPAC.
The public entities issuing the concessions, lease agreements and authorisations shall not deviate from such models.
Furthermore, the PPP agreement will have a specific form and terms to be followed by the parties, as per Law No. 11,079/2004, which sets general rules for bidding and contracting of PPPs within the public administration.
What government approvals are required for the implementation of a port PPP agreement in your jurisdiction? Must any specific law be passed in your jurisdiction for this?
A bidding process is required prior to the implementation of a PPP, in line with Law No. 11,079/2004. This bidding process includes some requirements in order for the PPP to be implemented, such as authorisation by the authority based on a technical study, the elaboration of estimates of budget and financial impact, submission of a draft of the announcement for public consultation, issuance of guidelines for the environmental licensing of the project, publication of the bid announcement, qualification of interested parties, presentation, qualification and evaluation of proposals and granting of the bidding procedure’s object to the respective winner. However, no specific law is required in order to execute a PPP agreement.
On what basis are port projects in your jurisdiction typically implemented?
Organised ports in Brazil are based on the build-operate-transfer model, as per Law No. 12,815/2013, since after winning the bid process the operator is granted authorisation to operate the port for a specific term, after which the related assets are to be reverted to the government. However, the build-own-operate-transfer model is adopted for private terminals.
Is there a minimum or maximum term for port PPPs in your jurisdiction? What is the average term?
According to article 5, I of Law No. 11,079/2004, the PPP term shall be in accordance with the amortisation and investments made and shall not be less than five years or more than 35 years.
On what basis can the term be extended?
Port concessions and lease agreements can be repeatedly extended for up to 70 years, as per Decree No. 8,033/2013 (as altered by Decree No. 9,048/2017). Also, the maximum term of 35 years, mentioned above, must be taken into consideration.
With respect to the average term, it is hard to state a figure, since to date there are no PPPs related to ports listed at the Brazilian Ministry of Planning’s official website.
For reference, with respect to private-use terminals, cargo transhipment stations, port facilities of small size, and port facilities for tourism, according to ANTAQ the average term of the respective authorisations granted under the subscription agreements corresponds to the maximum legal term of 25 years, established under Decree No. 8,033. However, due the extension of the maximum legal term from 25 to 35 years provided by Decree No. 9,048/2017, the average term for such authorisations is bound to increase accordingly.
What fee structures are used in your jurisdiction? Are they subject to indexation?
Port fees on public ports have a contractual nature, but are regulated and limited by the concession agreement, since the fees are a criterion for selecting the winning bidder.
On private terminals, the fees also have a private and contractual nature, subject only to reasonableness and fee publicity principles, as per article 3, II of Federal Law No. 12,815/2013 and article 28, I of Federal Law No. 10,233/2001.
The fees are subject to indexation to reflect inflation, in accordance with articles 17, IV and 62 of Federal Law No. 12,815/2013, and articles 27, IV and 35, VII and VIII of Federal Law No. 10,233/2001.
Does the government provide guarantees in relation to port PPPs or grant the port operator exclusivity?
According to article 8 of Federal Law No. 11,079/2004, the government may issue guarantees in relation to PPPs.
Exclusivity in ports has been the subject of a big discussion in Brazil, since the operators that obtained concessions in the public ports with a strict fee policy did not agree that authorisations to operate private terminals should be issued freely in their areas, unless restricted to cargo owned by the private port operator. However, since the government wanted to develop the ports and attract investments, since enactment of the Law on Ports there have been no restrictions on the type of cargo moved in private terminals. Notwithstanding this, during the course of authorisation procedures ANTAQ makes a public announcement to identify other companies interested in the area.
Does the government or the port authority provide any other incentives to investors in ports?
The Brazilian Federal government provides some incentives to investors in ports, the main ones being REPORTO and REIDI.
REPORTO is a tax regime to encourage the modernisation and expansion of port structures, regulated by Normative Instruction No. 1,370/2013 from the Brazilian Federal Revenue, which allows for the exemption of several taxes charged upon sales and purchases of certain products in the domestic market (IPI, PIS/PASEP, COFINS) and taxes charged upon importation (IPI, PIS/PASEP, COFINS, II). Port operators, port management concessionaires, companies authorised to explore port facilities of mixed or exclusive private use (including those who operate with offshore vessels) and dredging companies may be beneficiaries of REPORTO, among others.
REIDI is a special regime of incentives for infrastructure development created by Law No. 11,488/2007, which also applies to waterway transportation, organised ports and port facilities for private use. It provides for the waiver of PIS/PASEP and COFINS in the acquisition of new machinery, apparatus, instruments and equipment, as well as building materials for use or incorporation in infrastructure works intended for fixed assets, and services for infrastructure works for incorporation into fixed assets.
Port development and construction
What government approvals are required for a port operator to commence construction at the relevant port? How long does it typically take to obtain approvals?
In order to be able to start construction of the relevant port, the agent must have:
- the corresponding environmental licence;
- authorisation from the Brazilian navy in relation to navigation safety and dredging;
- clearance from the Mining Department in relation to other mining exploration in the area, if any; usually related to dredging.
- authorisation from the Secretary of Union Assets (SPU) (in relation to the water mirror and beach front areas);
- authorisation from ANTAQ;
- authorisation from the local municipality in relation to the actual civil works, duly backed by registration of the plans at the Engineering Council;
- authorisation from the National Agency of Petroleum, Natural Gas and Biofuels (ANP) if the port installations involve moving oil, natural gas, their by-products and biofuels;
- an International Traffic Licence duly issued by ANTAQ to allow international waterway traffic for authorised port facilities; and
- a statement issued by MTPAC through the National Secretariat of Ports, regarding the project’s suitability to the port sector planning and policy guidelines.
Additionally, local authorities may impose additional requirements depending on the location of the port. Usually the environmental licences are the bottleneck, and can take from one to three years for greenfield developments. Hence, it is difficult to estimate a term for obtaining approvals.
Does the government or relevant port authority typically undertake any part of the port construction?
Yes, but mostly in relation to public ports. For public ports, the government must provide hinterland access, quay construction or maintenance and dredging. As mentioned above, where the federal government is responsible for providing the port access infrastructure it can delegate through concessions to the private sector. Usually the public ports have already built their infrastructure.
Dredging work and maintenance have been a specific point of contention, since most Brazilian ports do not meet international draught standards. Therefore, in 2012 the federal government launched the National Programme for Port and Waterway Dredging II (PND II), which is part of PIL. PND II provides a 3.8 billion reais investment in maintenance dredging of the public ports of the country over the next 10 years.
For new private ports, the government is responsible only for public transportation in the area. Any specific road or quay construction or dredging must be carried out by the port operator.
Does the port operator have to adhere to any specific construction standards, and may it engage any contractor it wishes?
There is no specific construction standard, but the port operator must follow the requirements made by all of the several authorities involved in licensing the port construction, among which are:
- the Federal Revenue (in relation to the terminal customs area);
- federal or state environmental entity (as per environmental licensing);
- the Engineering and Architects Council;
- the Brazilian Committee of Construction and the Brazilian Association of Technical Standards;
- the Labour Ministry (in relation to the Regulatory Standards for Safety);
- the municipal authority (in relation to any local restrictions);
- the SPU (in relation to any reclamation, dredging or works on water);
- the port captaincy (in relation to the access channels, berths and manoeuvring areas); and
- the port authority (in relation to the public ports).
Operators of private terminals are allowed to engage any contractor they wish; however, the operators of public ports must observe bidding requirements.
What remedies are available for delays and defects in the construction of the port?
In this regard, it is important to highlight once again Law No. 8,666/1993, concerning bidding processes. This law sets some remedies that are available in the event of construction delays, such as the application of penalties, financial compensation or even the entitlement to terminate the contract. It also provides that, in the event of defects, the agent might be obliged to repair and take the necessary steps to correct them.
What government approvals are required in your jurisdiction for a port operator to commence operations following construction? How long does it typically take to obtain approvals?
The environmental licensing process has a three-step licence structure: previous licence, installation licence (to start building) and operational licence (to start operation). The authorisations issued by ANTAQ and MTPAC to operate private ports are also divided into a two-step licensing procedure: installation licence and operational licence.
Further, ports shall further be authorised by the ANP if handling any substances under their competence. Other licences from the fire department, the port captaincy (in relation to signalling and lights), the Committee of Public Safety in Ports (when applicable), SPU, Environmental Authority and other authorities may be necessary.
It is very hard to estimate the timing for obtaining such approvals, as each project has its specific requirements.
What services does a port operator and what services does the port authority typically provide in your jurisdiction? Do the port authorities typically charge the port operator for any services?
The main responsibilities of the port operator are provided for under Law No. 12,815/201 in article 2, XII, which defines the port operator as the pre-qualified legal person to exercise the passenger handling activities or movement and storage of goods to or by water transport within the organised port area.
Furthermore, the port authority is precisely the administrator of the port, as defined by article 17, paragraph 1 of Law No. 12,815/2013. This same article, as well as article 18, lists the main responsibilities of the port authority, such as to comply with the applicable legislation, to pre-qualify operators, to supervise construction works and port operations, to promote the removal of vessels and hulls, to authorise the entry and exit, docking and undocking of vessels, to report infractions and to act before ANTAQ, among others.
In each public port, there are fees payable to the port authority, usually related to the use of the public infrastructure (access channels, etc). Usually those are charged by the port operator to the customer and then transferred to the port authority.
In the private ports, the port operator and the port authority are the same company or entity.
Access to hinterland
Does the government or relevant port authority typically give any commitments in relation to access to the hinterland? To what extent does it require the operator to finance development of access routes or interconnections?
In relation to terminals in public port areas, access to the hinterland is the government’s responsibility.
With regard to private ports, the operator must perform construction, renovation, expansion and improvement activities for its regular operation, including necessary access and connection to public roads and railways, as per article 4, section V(b) of ANTAQ Resolution No. 20/2018.
How do port authorities in your jurisdiction oversee terminal operations and in what circumstances may a port authority require the operator to suspend them?
The port authority must oversee the agreements and compliance with them, any authorisations and the implementation of concessions. Also, as provided by article 17, X of Law No. 12,815/2013, the port authority may suspend port operations that may harm the port infrastructure or its operation.
Port access and control
In what circumstances may the port authorities in your jurisdiction access the port area or take over port operations?
This scenario is provided for by article 32 of Law No. 8,987/1995, which sets the circumstances in which the authority may intervene in the concession in order to assure the appropriate performance of the service and the due observance of the applicable rules. Such intervention shall be made through decree. In addition, the public authority may intervene on behalf of the public interest upon prior payment of compensation.
Further, article 7 of the Law on Ports allows ANTAQ to regulate the exceptional use by any interested party of port facilities leased or operated by a private concessionaire, under the condition of ensuring adequate compensation.
Failure to operate and maintain
What remedies are available to the port authority or government against a port operator that fails to operate and maintain the port as agreed?
If the port operator fails to operate and maintain the port as agreed, the port authority may take over the port operations and terminate the agreement early, and may also apply the corresponding penalties. The penalties are set forth in Law No. 12,815/2013, article 47:
- fine (as per ANTAQ Resolution No. 3,274, fines can reach 1 million reais);
- prohibition of access to the port area;
- suspension or cancellation of the concession, lease or agreement with the port operator; and
- prohibition to contract with any public entity.
ANTAQ may also apply, separately or jointly, the sanctions established in Federal Law No. 10,233/2001, which include penalties to the individual officers of the port operator.
What assets must port operators transfer to the relevant port authority on termination of a concession? Must port authorities pay any compensation for transferred assets?
As determined by article 5, paragraph 2 of Law No. 12,815/2013, at the end of the term of the contract, the assets linked to the concessions or leased must be transferred to the Federal Union, without any compensation. However, compensation will be due in relation to investments related to the reversible assets not yet amortised or depreciated which were made aiming at the continuity of the services provided, in accordance with article 36 of Law No. 8.987/1995.
Special purpose vehicles
Is a port operator that is to construct or operate a port in your jurisdiction permitted (or required) to do so via a special purpose vehicle (SPV)? Must it be incorporated in your jurisdiction?
There is no requirement for a private port operator to be incorporated under an SPV, although such a structure is permitted. As mentioned above, an SPV is a requirement only if the port operator is a PPP.
For the lease of areas in public ports, there is a requirement to incorporate an SPV, as per ANTAQ Normative Resolution No. 07.
However, in any case, the port operator of either a public port or a private port must be incorporated under Brazilian law and headquartered in Brazil.
Transferring ownership interests
Are ownership interests in the port operator freely transferable?
Decree No. 9,048/2017 states that authorisation to operate a private port may be transferred upon prior authorisation from MTPAC and should be notified to the SPU. The change in control of the port operator is subject to prior authorisation from ANTAQ, and should be notified to the authority within 30 days after the act.
In the case of areas within a public port, either through concession or lease, any transference or change in control may only be carried out in accordance with the provisions set out by the authority under the concession contract or lease agreement, as the case may be.
Can the port operator grant security over its rights under the PPP agreement to its project financing banks? Does a port authority in your jurisdiction typically agree to enter into direct agreements with the project financing banks and, if so, what are the key terms?
The port operator may grant as security its receivables under the concession contract, as provided in article 28 of Federal Law No. 8,987/1995. However, the security may not impair the operations and continuity of port services and the following obligations provided under the mentioned article must be observed:
- registration of the assignment agreement with the Registry of Deeds and Documents;
- notification to the government;
- the receivables must be transferred to the lender, irrespective of any additional formality; and
- the contract must provide for the transference of the balance of revenues to the port operator when its credits are paid.
Brazilian port authorities usually agree to enter into agreements with banks. The Brazilian National Bank for Economic and Social Development has financed most of the port investments in the country and estimates that around 15 million reais will be invested in the port sector between 2016 and 2019.
Agreement variation and termination
In what circumstances may agreements to construct or operate a port facility be varied or terminated?
Law No. 8.987/1995 provides for the circumstances that may give cause to the termination of the contract, such as expiry of the term of the contract, bankruptcy and breach of contractual terms. Additionally, article 5, XIII of Federal Law No. 12,815/2013 provides that any cause that might lead to the termination of the agreement must already be indicated in the wording of the agreement itself.
In relation to modifications, article 5, IX of Federal Law No. 12,815/2013 expressly provides that any provision related to possible modification of concessions or lease agreements shall be foreseen in the corresponding agreements, in order to avoid a new bidding procedure.
In relation to contracts for the operation of private terminals, in practical terms any modification results in the same proceedings adopted for issuing of a new contract. However, as per Decree No. 9,048/2017, the issuance of a new contract is not required for modifications related to the expansion of the port facility area (provided there is locational feasibility) or to alter the financial schedule or the amount of investments planned for the installation of the port facility.
What remedies are available to a government or port authority for contractual breach by a port operator?
In the event of a breach of the agreement entered into between the government or port authority and the operator, the party becomes entitled to terminate the contract or to apply the corresponding penalties, in accordance with the terms of the agreement and Law on Ports, regulated by ANTAQ and SEP resolutions.
Must all port PPP agreements be governed by the laws of your jurisdiction?
Yes. It is not possible to have a PPP agreement subject to the laws of a foreign jurisdiction, in accordance with Law No. 11,709/2004.
How are disputes between the government or port authority and the port operator customarily settled?
Disputes at an administrative level, concerning organised ports, and disputes between the government or Port Authority and the operator, are settled before ANTAQ, as determined by Decree No. 8,003/2013.
Article 11, III of Federal Law No. 11,079/2004 expressly allows for the choice of arbitration to settle disputes under the PPP agreements.
Decree No. 8,465/2015 sets forth rules for the application of arbitration in port conflicts involving on one side the public administration and on the other the concessionaire or port operator, provided the disputes are related to the payment of fees or other patrimonial disputes.
Updates and trends
Updates and trends
Updates and trends
Currently, the legality of Decree No. 9,048/2017, which introduced several changes to port regulations in Brazil in a further attempt to foster investment in the port sector, has been under discussion by Brazilian authorities. In July 2018, the Federal Court of Audit (TCU) restricted the application of the main part of Decree No. 9,048/2017, which allows the government to renew concessions of companies in the sector for up to 70 years in advance.
As decided by the TCU, MTPAC may extend each contract only once, subject to the original term agreed with the company. Thus, if the original agreement provided a term of 25 years for the exploration of the port facility, it may only be extended for another 25 years (up to the limit of 50 years). In this regard, the extension of agreements for up to 70 years may only be done for concession contracts executed after 10 May 2017 (when Decree No. 9,048/2017 was signed).
Because of this, there are still 114 requests for the extension of port concession agreements pending definition and investments estimated at US$8 billion to be released for new infrastructure in the next five years.