Is the decentralization of port management the solution to administration problems?

Administrative problems affect the results of any commercial practice. Therefore, finding solutions for them tends to be a priority. In this sense, the decentralization of port management can be a good solution.

As this is a subject of great importance for those working in the area, we have prepared this content. Throughout the text, you’ll understand what the industry’s current challenges are and what can be done to solve them. Enjoy the information!

What does the decentralization of port management represent?

To address this issue, we spoke with Nilo Martins da Cunha Filho, who is a civil engineer and owner of MC Consultoria & Assessoria Portuária Ltda. 

According to the expert, before answering the question that gives title to this topic, it is necessary to remember the context in which Law No. 8,630, better known as the Law of Ports, was promulgated. After all, “it characterized a new regulatory framework for national ports, meeting a great desire from the port community and international trade”.

From that fact, a new era began, with the deregulation and decentralization of an important economic activity. Nilo also explains that, “on the occasion, Port Authority Councils (CAPs) were created, which made decisions about ports that were within their competence. The members, in turn, were part of the community in which the port in question was located”.

At the time, the port administration had the autonomy to conduct various issues related to expansion, planning, regulation and commercial aspects in general. It was, therefore, the beginning of decentralization. 

Decisions came to be taken by representatives of civil society who depended on the activity of a particular port. Thus, in addition to the development of actions relevant to commercial fomentation, labor negotiations have also become local, respecting the specificities of each port.

The concept of port authority was then born in Brazil, through the adoption of the landlord model for the exploration of ports. “With that, the privatization of port operation services came and large investments began in the area, represented by the leasing of existing facilities and the appearance of several private terminals”, contextualizes Nilo.

How to promote decentralization in the management of Brazilian ports?

“However, in 2013, with the repeal of Law No. 8,630 and the promulgation of Law No. 12,815, the Port Administrations lost their autonomy, and the CAPs became mere supporting actors. There was excessive regulation in the activity, carried out by bodies such as the National Agency for Water Transportation (ANTAQ) and the Secretariat of Ports of the Presidency of the Republic (SEP)”, the expert says.

Even with the significant difference between these regulatory frameworks, Nilo points out that they both have one thing in common: political interference in public administrations and the effect that this has on economic activity. “Because of this,” he says, “I understand that a true decentralization of management in Brazilian public ports necessarily requires a profound change in the current regulation”.

“To that end,” says Nilo, “the current Dock Companies should be transformed into Special Purpose Entities (SPEs), with the participation of the private sector. It would also be advisable to set up a Management Council with the same powers as the old CAP”, he says.

According to him, one of these duties would be to approve the appointment of members to the Board of Directors of each port. The criterion would be meritocratic, and there would be annual evaluations respecting the previously approved work plan and goals. 

What are the current problems in port management and how to solve them? 

In the expert’s view, the current problems in the management of Brazilian port complexes are due to the political influence in the composition of the managerial and management positions, in addition to the bureaucracy generated by the lack of autonomy and excessive regulation.

“To reach this conclusion, it is enough to analyze specialized publications and magazines published in the last 20 years — the dredging problems of the national ports remain the same, with little or no progress”, he criticizes.

He also says that this reflection also applies to other modals, such as road and rail that allow access to the port, since the interaction between them and the ports is essential, as well as the maintenance of other assets, such as paving the facilities, buildings, lighting, etc. 

Because of all these points, Nilo points out that the decentralization of management is emerging as a more than necessary solution. In this context, care must be taken not to confuse it with the possible privatization of ports, since one decision does not follow from the other. “It is important to have public complexes, acting as market regulators and in defense of small and medium users”, emphasizes the engineer.

Faced with such a scenario, he believes that the reaction of investors would, for the most part, be quite positive, since the legal uncertainty generated by the excess of regulation and bureaucratic procedures works as an obstacle for those who intend to invest in the sector. “Many businesses do not advance due to this difficulty, which does not offer the necessary security and prevents the realization of investments of capital”, he explains.

What does Ordinance No. 530/2019 say?

Ordinance No. 530, published in August 2019, brought changes associated, in a way, with decentralization. In short, among other modifications, it established some criteria and procedures in order to extend the validity and restoration of the economic rebalancing in the lease agreements for port facilities located in organized ports. Some of the main changes are:

• change in the type of cargo handled;
• unification of contracts;
• common investment in the area of organized port;
• replacement of the leased area without prior bidding.

It is worth noting that the lease agreements may be extended at the discretion of the granting authority. It will be up to the lessee to present an application at least 60 months before the end of the term. The exceptions are the cases of port lease contracts whose term of validity or extension is less than ten years. In such situations, it will be possible to submit the application at least 24 months in advance.

Finally, the decentralization of port management tends to be a good way to solve some of the biggest administrative problems in the sector. Gradually, this alternative can become a key component to achieve better results.

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