On June 28, 2013, the Decree no. 8033 regulating Law no. 12815, of June 5, 2013, was published in the Official Gazette (respectively, “Regulating Decree” and “Ports Law”).

The Ports Law contemplates a new regulatory structure for the sector and contains provisions on direct and indirect exploitation of ports and port facilities by the Federal Union and activities undertaken by port operators. The Regulating Decree introduces the rules applicable to some of the major changes contemplated by the Ports Law, such as the change in the criteria used in tenders and mechanisms to authorize private terminals.

In order to increase competition, the criterion formerly used in tenders proceedings (highest bid) has been replaced by greatest capability to move tons and lowest cost. Therefore, in concession and lease tenders the following criteria will be used separately or in combination: (a) greatest capability to move, (b) lowest fees or (c) shortest time to move freight.

The Regulating Decree provides that such criteria may be combined with other criteria seeking to increase competition, such as highest investment amount; lowest consideration payable by the authority providing the concession; or best technical proposal. It also provides that tenders will be preferably in the form of open or combined bidding.

The Regulating Decree also contains important provisions in relation to the mechanism applicable to obtaining authorization from the Brazilian Agency for Waterway Transportation (“Antaq”) for private terminals. It is worth noting that one of the major changes introduced by the Ports Law relates to private terminals, replacing the former concept of private port facilities which could be used by private companies with limitations, focused on their own cargo. Pursuant to current regulations, private terminals no longer have the former obligation to apply priority to moving proprietary freight. The goal of the regulation is to allow new investments to be made by the private sector, thus increasing competition in the sector and reducing costs.

Private use terminals are now port facilities located outside the area of an organized port exploited under an authorization given by Antaq for a period of up to twenty five (25) years, extendable for successive periods, provided that the port activity is maintained and the authorization holder makes the necessary investments to expand and upgrade the port facilities, as provided in the regulations.

The Regulating Decree further establishes the methodology to be used by an authority to make decisions on private use terminals and commencement of public calls to identify whether there are persons interested in obtaining port facilities authorizations. The Regulating Decree is therefore an important guideline for investors interested in developing new projects in this sector.

For further information on these issues and other changes contained in the Ports Law and/or the Regulating Decree, please contact Eduardo Lima, Daniel Gunzburger or Victor Galante.

Observations in this update about Brazilian law are by Tauil & Chequer Advogados. They are not intended to provide legal advice to any entity; any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.