May 5, 2017 / 5:18 PM / a year ago

Brazil mulls longer, flexible port licenses to draw investment

SAO PAULO, May 5 (Reuters) - Brazil may revise public port regulations to lengthen operators’ contracts and encourage improvements, officials told Reuters, in an effort to attract more private investment in infrastructure that is crucial to the country’s powerhouse farm sector.

Building on the success of recent airport and power line auctions , President Michel Temer’s government is hoping to add capacity at ports exporting commodities from sugar and coffee to soy at some of the world’s lowest prices.

Samuel Cavalcanti, superintendent of licensing for federal ports agency Antaq, said new rules may increase the duration of an operator’s first license to 35 years and allow it to be repeatedly extended for up to 70 years. Current rules grant a first license of 25 years, with one extension of 25 years.

The new rules, which may be published this month, would also make it easier for private investors to expand capacity and carry out work such as dredging in common port areas, he said in a recent interview.

Tarcísio de Freitas, coordinator of the government’s Investment Partnership Program, said a presidential decree will make early licensing renewal and bidding for contracts at public ports “more agile,” without giving details of the decree.

The new regulations aim to build on commitments to invest some 9 billion reais ($2.84 billion), which 12 operators have made in return for early renewal of their licenses since Brazil enacted its latest port law in 2013, according to Antaq.

Many hailed that legislation for allowing early license renewals in return for investments and removing restrictions on third-party cargo at private container terminals, but shipping industry executives see room for improvement.

Despite recent investments, Brazil still ranks 55th among 160 countries in the World Bank’s Logistics Performance Index.

Industry group Abtra, which represents 60 port operators, has complained that ambiguity about expired licenses is holding back investments in port areas conceded to private initiative before 1993. Cavalcanti said the government was looking at how to adapt those contracts to encourage new investments.

Clythio Buggenhout, Brazil ports director at Cargill Inc , said some investments are on hold because only a fraction of the requests for early license renewals were granted, due in part to rules centralizing decisions in the capital Brasilia.

“Port administration authority should fall on regional entities because of Brazil’s continental dimensions,” he said.

Antaq said the draft of the proposed new rules does not address proposals for decentralization. ($1 = 3.16 reais) (Additional reporting by Leonardo Goy in Brasilia; Editing by Brad Haynes and Matthew Lewis)

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