New government must stop at least five privatizations

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An important part of the privatization and concessions agenda that was being played in the government of Jair Bolsonaro should end up being reviewed, postponed or even canceled with the entry of Luiz Inácio Lula da Silva in the Planalto, according to specialists consulted by the CNN Brazil Business 🇧🇷

Correios, Dataprev and the Port of Santos, in addition to the process of selling Petrobras assets, such as gas pipelines and refineries, are some of the main privatization projects that were already underway or with a project ready in the current government, and that the team of transition to Lula’s third term has already said that they should be revisited. Embrapa, an agricultural research company, which was also a candidate for a privatization process, is another state-owned company that should not migrate to the private sector.

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In an interview with CNN this Thursday (24), PT senator Rogério Carvalho also withdrew any possibility of discussing the privatization of public banks – Bank of Brazil 🇧🇷 Cashier and BNDES -, Besides the Petrobras and the Embrapa 🇧🇷 None of these companies had the sales process studied so far.

Carvalho also confirmed the new management’s lack of interest in proceeding with the sale of Dataprev – “no government will privatize its main source of information” – and the momentary suspension of the project for the Correios, although he did not discard his debate and also that of others projects.

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“As for the Post Office, there is a discussion that needs to happen. At this moment, any proposal for privatization is suspended, but it is necessary to assess whether the Post Office will continue to be a company with exclusive government capital”, he said.

“No strategic company that is producing results and that is important should be privatized just for the sake of being privatized. Companies that are going to enter the privatization program are companies that have no strategic role, that are not becoming viable. This debate must be left for a second moment, after the government forms its base of support, after defining its ministry.”

stopped projects

At the top of the list of major promised privatizations that ended up pending on the Bolsonaro-Paulo Guedes ticket are the Mail which would be next in line after the privatization of Eletrobras, completed in June.

The team of Guedes, Minister of Economy, even presented the bill for the privatization of the postal company in February, but the attempt did not go ahead, and Lula’s transition team has already warned that it will work to interrupt the plan.

“It is definitely very difficult to have a privatization of the Post Office, given that the new government does not believe in the importance of privatizations”, said the partner of the business consultancy Inter.B, Claudio Frischtak.

THE Dataprev a system that manages the National Institute of Social Security (INSS) database, and the Port of Santos there are two others that were in the process of being privatized in the current government, and that members of Lula’s transition team have already said that they should be reviewed.

Complete the list Petrobras asset sales an agenda that comes from the government of Michel Temer to dry up other businesses of the state-owned company, such as gas pipelines, distribution and refining, and focus essentially on oil exploration and production.

“We had been making a lot of progress in this, but it is possible that this pace will now slow down”, said economist Gesner Oliveira, partner at GO Associados. “In the case of the sale of the refineries, however, the commitment with Cade would have to be reviewed; it was a decision and there are penalties for not complying with it”, said Oliveira, who has also chaired the Administrative Council for Economic Defense.

Although Lula has repeatedly criticized Petrobras’ withdrawal of fuel refining, the competition defense body and the oil company have signed a Term of Cessation Commitment (TCC) that guides the sale of refineries that are now virtually monopolized by the state-owned company.

viable concessions

On the other side of the table, there are concessions that, in the opinion of specialists, should not be interrupted or that, even if postponed, still have a chance of moving forward, even if further ahead.

This is the case of the concession of Rio de Janeiro airports Galleon and Santos Dumont : the current government had to think of the plan for them and talked about bidding them together after the concessionaire that already managed Galeão broke the contract and returned the airport to Infreaero earlier this year.

“Under no circumstances would this concession take place before the second half of 2023, because the modeling of this ‘duo’ is very different and the accounts will have to be redone”, says Frischtak, from Inter.B.

“But it’s hard for the government not to go ahead with it; It is interesting for them to have a concessionaire that gives new life to Galeão, which is completely empty”, he added, noting that, even with criticisms of the methodology, it was in Dilma Rousseff’s government that the first airport concessions in the country were made.

Frischtak also does not completely rule out the possibility that the privatization of the Santos Port Authority (SPA), the state administrator that controls the Port of Santos, in São Paulo, will be resumed under Lula.

“It could happen, if there is very clear evidence, in a couple of years, that the privatization of Codesa was successful”, he says, referring to the concession of Companhia Docas do Espírito Santo in March, in what was the first privatization of a port administrator in the country.

Oliveira, from GO Associados, considers this exit more difficult. “Under Lula, there must at least be a rediscussion,” he said. “There are precedents in the world, but it is not a consensus model.”

He believes, however, that a series of other concessions already planned, as in railways and highways – another niche that had its own auction program in PT governments – should continue without major surprises.

“There may not be as strong a stimulus as there was from the current Ministry of Economy, but these are concession models that date back to the 1990s and have very robust jurisprudence; there should be no interruption,” he stated.

Source: CNN Brasil

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