Brazil’s State Machine Shrinks

The 1990s in Brazil was a decade characterized by privatizations and a shrinking of the state. A total of 133 state-run enterprises were privatized between 1997 and 2002, reports the government statistical bureau (IBGE) in its new survey, Public Finances.

According to Carlos Sobral, who coordinated the survey for the IBGE, “The privatizations [undertaken by the Collor and Cardoso administrations] caused a sharp reduction in the presence of state-run enterprises in Brazil’s economy.”


Privatizations Are Over


Earlier in the Lula Administration, the president of the Furnas Electricity Central, José Pedro Rodrigues de Oliveira, informed that energy systems in South America would require investments on the order of US$ 8 billion, between 2004 and 2007.


Rodrigues de Oliveira also assured that there is a clear orientation on the part of President Lula’s Administration in the sense that now is the time for partnerships, not privatizations and State take-overs.


“There is a clear guideline from the Administration that the period of privatizations is over, just as the period of State take-overs has already ended. Now is the time for partnerships.”


Following this orientation, passed along by the Minister of Mines, and complying with a request made by the Ministry of Foreign Relations (Itamaraty), Furnas did a feasibility study that indicated 14 possibilities of partnerships with the private sector.


The first of these, according to Oliveira, is the resumption of construction on the Angical Fish Power Plant, which is the subject of discussions with the Portuguese firm, EDP.


Rodrigues said that the private sector has been proposing partnerships, and he cited the Pan American company, which presented a project to import energy from Bolivia.


The Pan American company would build a thermal plant in Bolivia, and Furnas would install the transmission lines to transport the energy produced there. The project would involve US$ 2 billion in resources.


Agência Brasil

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