The government of Brazilian President Michel Temer says 57 public companies and airport terminals will be privatized, with the objective of reducing the country’s fiscal deficit which amounts to nearly US$ 500 billion.
The measure was announced just hours after the government declared its intention to sell Eletrobrás, Brazil’s largest energy company.
The new concessions will be carried out through a package that intends to tender the administration of 14 airports – including the Congonhas aircraft terminal in São Paulo – 11 lots of electric transmission lines, 15 port terminals, two highways, and several public companies such as the mint, where the country’s tickets and passports are produced.
The presidential office claims the privatizations will generate important investments in oil and gas, energy, roads, airports and ports.
It will also create employment and income in Brazil, according to Moreira Franco, Minister to General Secretariat of the Presidency.
But the measure has provoked strong criticism from social organizations and leftist political parties in the country, who assert that the privatization of state assets favors business interests and non-citizens.
Former President Luiz Inácio Lula da Silva said during an interview with Brazilian media outlet Globo that the maneuver would lead to a rise in public debts and force Brazil to resort to its international reserves.
In Lula’s opinion, the reserve funds should be used to rebuild the Brazilian economy.
“When they have nothing to sell, they are going to sell their souls to the devil,” added the ex-president.
Brazil’s surprise move to privatize Centrais Elétricas Brasileiras SA sent the utility’s shares soaring nearly 50% on Tuesday as investors bet the plan augured further moves to loosen the government’s grip on the economy.
The transaction should be concluded by mid-2018 and could involve the sale of new stock to help replenish the capital of Eletrobras, as the holding company is known, Mines and Energy Minister Fernando Coelho Filho revealed.
While the plan involves the end of federal government voting control at Eletrobras, it remains to be decided how much of its 51% voting stake will be sold and how, deputy Finance Minister Eduardo Guardia said. Proceeds should help cut the deficit, he said, noting the plan could also bring recurring revenue under certain conditions.
President Michel Temer has rushed to sell state assets and shrink the size of Brazil’s government before leaving office in December 2018. Investors cheered his efforts to reduce state meddling in an economy hobbled by a three-year recession, lifting the benchmark Bovespa stock index on Tuesday past 70,000 points for the first time in almost seven years.
The plan comes as Chief Executive Officer Wilson Ferreira Jr’s turnaround has taken longer than expected because of years of mismanagement at Eletrobras and massive operational losses between 2012 and 2015.
Investors said the Eletrobras plan stoked optimism that Temer remains committed to shrinking the role of the state in the economy, regardless of political resistance to his administration.
“This could be extended to other state firms, which is good for fiscal and market reasons,” said Victor Carvalho, a partner at fund manager LAIC-HFM in São Paulo.
According to Coelho Filho, Eletrobrás’s privatization could raise up to 20 billion reais (US$ 6.3 billion). The federal government will remain a shareholder and reserve the right to veto some strategic decisions.
Former Brazilian President Luis Inácio Lula da Silva has criticized President Michel Temer’s plan to sell Eletrobrás, the country’s largest, publicly-controlled power company.
The Temer-controlled Mining and Energy Ministry notified Eletrobrás of the plan and announced that it intends to deliver the proposal to the Temer administration, which continues to oversee mass privatization, arguing the move would make the company “more competitive and agile.”
“I must prove to these folks,” Lula said, “that we don’t have to sell Eletrobrás. What we have to do is hang our heads in shame and work because this country can be much better.”
Speaking in Sergipe state as part of his “Caravan of Hope” tour, the former president argued that Eletrobrás should remain publicly owned — currently, the Brazilian government owns just over 56 percent of its shares.
Lula declared that “if the justice department allows him” to participate as a presidential candidate in 2018, he will “win and do more,” including protecting state-run services.
“We will not rest until the people’s dignity is restored,” he added.
Former President Dilma Rousseff took to Twitter to denounce the move: “Selling Eletrobrás is giving up energy security. As happened in 2001, in the FHC (Fernando Henrique Cardoso) government, it means leaving the country subject to blackouts.”
She continued: “The result is only one: the consumer will pay a stratospheric light bill for energy that will not have guaranteed supply.”
Rousseff was impeached in a parliamentary coup in August 2016, paving the way for the senate-imposed government of Temer and its neoliberal policies. At the beginning of the Lula administration, Rousseff headed the Mining and Energy ministry between 2003 and 2005.
Eletrobrás is the biggest electricity utility company in Latin America and the tenth biggest in the world. Through its subsidiaries, it owns 40 percent of Brazil’s generation capacity, most of it from hydroelectric power plants, and it controls 69 percent of the country’s electricity distribution.
The company was set up by the left leaning president, João Goulart, in 1962. The Brazilian state currently owns, directly and indirectly, just over 56 percent of its shares. The rest are traded on the São Paulo stock exchange, as well as on the New York and Madrid stock exchanges.
Critics immediately denounced the ministry’s move as another part of the government’s attempt to tackle its public spending deficit of almost US$ 50 billion by cutting social welfare and privatizing public assets.
The leader of the opposition Workers’ Party, or PT, in the senate, Lindbergh Farias, denounced the sale of Eletrobras as “a crime against the nation.”
The Ministry of Energy has not said how much of the government’s stake it wants to sell. It did say the sale would follow the pattern set in selling state shares in Brazil’s leading aircraft manufacturer, Embraer, and the iron mining giant, Vale. It insisted the government would retain some shares and a power of veto over strategic decisions.
According to the ministry, the problems at Eletrobrás result from 15 years of inefficiency, and “have cost society almost a quarter of a trillion dollars.”
After winning a vote in Congress early this month to block corruption charges against him, Brazil’s president, Michel Temer, promised to accelerate his program of reforms. These include reductions in labor and pension rights, cuts to anti-poverty programs, and the rolling back of land rights for Brazil’s Indigenous and Afro-Brazilian communities.
Taking Orders from Washington
In a Thursday statement, the Workers Party of Brazil denounced the privatization wave announced by the Temer government, saying that the government only serves “big international capital” and called on Brazilians to “resist in all possible ways.”
“In the country of the coup, the big decisions are made in Washington and Wall Street, and the order given is to sell and loot Brazil,” the Workers Party said in a statement on Thursday.
The party founded by Luiz Inácio Lula da Silva called on Brazilian people to “resist in all possible ways the crimes that condemn the country and future generations to dependence, backwardness and submission.”
The parliamentary coup, which removed the elected president Dilma Rousseff and installed the right-wing government of Michel Temer, “always had as its main purpose the goal of pushing Brazil back to the colonial era, to become a small, dependant country, technologically backward and submissive to the interests of big international capital,” the statement said.
“In reality,” the Workers Party says, “the real reason for the implementation of these anti-Brazilian measures is to carry out large business deals that only enrich the coup leaders and their partners to the detriment of national interests.”
Workers Party founder and former president of Brazil is currently on a tour, called the “Caravan of Hope” looking to unify resistance against Temer and identify the needs of the people ahead of the 2018 presidential elections.
“When they have nothing to sell, they are going to sell their souls to the devil,” the ex-President said recently about the planned privatizations.