By Roberto Samora
SAO PAULO, Dec 8 (Reuters) – Brazil’s Federal Audit Court (TCU) on Monday recommended, by six votes to three, that the auction of Brazil’s planned mega container terminal at the Santos port ban operators of other such terminals there from participating in the first phase of bidding, citing possible market concentration.
The decision deals a blow to companies such as Danish shipping group Maersk, MSC and others that operate container terminals in Latin America’s largest port, because these companies will only be able to enter a second phase of the auction if the first does not attract valid bids.
The two-phase model, proposed by port regulator Antaq and challenged by Maersk in court, could benefit new entrants from Asia or even companies belonging to the JBS meatpacking group, which entered the shipping sector last year as operator of a container terminal in Santa Catarina.
The Brazilian government expects building the Tecon 10 terminal to cost nearly 6 billion reais ($1.11 billion) over 25 years, and boost container handling capacity at Santos by 50%, minimizing logistical bottlenecks.
“Accepting the proposal to hold the auction in two phases increases the chance of an independent operator entering (the port) and reduces the risk that a single operator controls the terminal,” said Augusto Nardes, a member of the TCU court.
Philippines-based International Container Terminal Services, operator of 33 container handling terminals in various countries, welcomed the TCU’s decision.
“This is a traditional and well-known model in the infrastructure sector, which encourages the effective entry of a new player into the Port of Santos,” it said in a statement.
But the decision, which allows for the auction to be scheduled by the Ministry of Ports, was not unanimous.
Benjamin Zymler, a member of the court, defended an alternative model whereby the winner, if already an operator at Santos, be forced to divest assets.
Barring current operators from the first phase of the auction could breach the principle of competition in the bidding process, said Cristina Machado, a public prosecutor at the TCU.
($1 = 5.4298 reais)
(Additional reporting by Luciana MagalhãesWriting by Ana Mano)
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