Senate approves project that creates BR do Mar

This Thursday (25th), the Senate plenary approved a bill creating the so-called BR do Mar, an initiative that seeks to encourage navigation between national ports (cabotage). One of the goals is to reduce Brazil’s dependence on road freight transport.

The proposal was symbolically approved by the senators. However, as there were changes, it needs to go through a new vote in the Chamber of Deputies, before going to the sanction of President Jair Bolsonaro.

The BR do Mar project is one of the government’s bets on the infrastructure area, which is why it involved great articulation by minister Tarcísio Gomes de Freitas.

The proposal was approved by federal deputies in December of last year, but later began to face resistance from senators. Added to this were differences within the government on some points, opposing the Ministry of Infrastructure to the team of Minister Paulo Guedes, of Economy, for involving fiscal issues.

The bill that creates the BR do Mar seeks to make some rules for navigation between national ports more flexible and increase the fleet of vessels. The government hopes in this way to stimulate competition in the maritime cargo transport sector, increasing the possibilities of renting vessels from other countries.

Currently, only vessels connected to the so-called EBNs (Brazilian Navigation Companies) can carry out coastal shipping. These companies may have entirely foreign capital, but they must have their own vessels. Authorization from Antaq (National Waterway Transport Agency) is also required.

The approved bill increases the possibilities for EBNs to charter vessels without the obligation to own their own vessels.

“This change, however, is accompanied by incentives for EBNs to maintain and increase their own fleet, which contributes to an important aspect of coastal shipping, which is the availability of the service”, states the text by rapporteur Nelsinho Trad ( PSD-MS).

By removing the obligation for the company to have its own fleet, the intention is to reduce costs and speed up the market. It would be possible for an authorized company to operate in cabotage transport without having to invest heavily in the construction of a ship, for example.

In addition, the rapporteur promoted an amendment regarding the crew of foreign vessels. The text that had been sent by the government and approved by the Chamber predicted that two thirds of the workers would need to be Brazilian. Trad reduced the minimum number of Brazilians to a third of the crew.

Nelsinho Trad states in his text that the freedom to charter foreign vessels does not have a major impact on Brazilian industry. In fact, the rapporteur claims that the national industry was already facing difficulties and contributed little to the market. Trad cites data from the Ministry of Infrastructure that show that, in the last ten years, only four national ships were delivered.

Another item of the project foresees the creation of the Brazilian Investment Company in Navigation, which should build a fleet and charter the vessels for EBNs to operate. This eliminates the need for EBNs to invest in their own fleet.

The point of disagreement within the government refers to the extension of the Reporto, a special tax regime that relieves investments in port terminals and railways. Reporto was in effect until December 31 of last year.

However, in a victory by Tarcisio Freitas, the special regime will be resumed from January and will be valid until the last day of the year 2023.

The proposal had also faced strong opposition from the road transport sector. However, Nelsinho Trad says in his report that the sector will not be greatly impacted, as coastal shipping will take place along a north-south axis, along the coast, while truck transport will have more capillarity.