Pedro Henrique Jardim, André Camargo Galvão and Leandro Lopes Zuffo

The Ministry of Infrastructure recently announced the possible creation of the BR dos Rios program, a new public sector policy focused on inland navigation. The director of the Department of Navigation and Waterways of the National Bureau of Ports and Waterway Transport (DNH-SNPTA), linked to the Ministry, released a note on internal debates and with participants from the inland navigation sector regarding the need for this new program, which is inspired by the BR do Mar project which is in legislative process, focused on cabotage navigation (Bill No. 4,199/2020).

According to the information disclosed, the BR dos Rios program is still under discussion with Brazilian shipping companies (EBNs), trade unions, and others interested in the matter. After this phase, if the way forward is similar to the BR do Mar project, priority guidelines will possibly be formulated to be presented in the form of a resolution by the Investment Partnership Program (PPI).

The specific measures, however, are not yet clear. It is not possible to know, for example, whether the movement towards relaxation in the charter system, which was dealt with by the BR do Mar program, will be mirrored in the BR dos Rios project. From the information available, it is possible to envisage specific measures to review the regulation of locks, which are necessary to make the operation of the hydroelectric power sector compatible with river navigation activities. Currently, locks are regulated by Law No. 13,081/15, but there is a noted need for more specific regulations and better delimitation of the possibly conflicting roles assigned to the National Water Agency (ANA), the National Water Transport Agency (Antaq), and the National Electric Energy Agency (Aneel). In this scenario, the director of the DNH-SNPTA believes one must still delimit a supervisory authority for river transport.

Although its potential has not yet been fully exploited nationwide, inland waterway shipping currently plays an important role in the Northern Region of Brazil. The Tapajós River alone is responsible for about 27% of transport in this modality, according to data presented by Antaq.

Inland waterway shipping is seen as strategic from the point of view of sustainability by the Ministry of Infrastructure, which has partnered with the World Bank to study alternatives for the management of the Madeira and Tapajós rivers. Due to positive environmental characteristics compared to other modes, river navigation projects may also benefit in the future from the ESG (environmental, social and governance) agenda that has been developed by the government in conjunction with the Climate Bonds Initiative (CBI).

For now, the joint agenda of the Ministry of Infrastructure and the CBI only presents more concrete results for the brazilian railway sector, in which the agenda is to structure projects that are already certified as sustainable at the time of auction.

Certification as a sustainable project may offer tax benefits to the issuer of securities that fall under the provisions of Bill No. 2,646/20 (the Green Bonds Bill), which, among other provisions, provides for the creation of a new type of incentivized debentures for financing sustainable projects, popularized with the term “green bonds”. According to the Green Bonds Bill, projects that receive national or international certification will be eligible for being considered as green bonds. Currently, the certifications available are provided by the CBI and the International Capital Market Association (ICMA). Also, according to the Plan, these issues will have access to a simplified procedure and greater tax benefits than those currently provided for infrastructure debentures.

In the navigation sector, there have already been issuances abroad based on the principles stipulated by the ICMA. In addition, the CBI plans to develop specific criteria by the end of this year for the shipping category, in the same way as was done for other sectors, observing the particular characteristics of each economic activity (e.g. railroad, electric or solar energy, basic sanitation, and construction).