where is the Bolsonaro privatization program?

Frustrating financial market expectations and falling short of one of the most incisive campaign promises, the Bolsonaro government ended last year without being able to sell any state-owned enterprises directly controlled by the approved Eletrobras Privatization Union. by Congress this year. The government’s initial expectation was to complete the operation in January 2022, but, with the deadlock in the process, the screening was extended until May at most.

However, some believe that the sale of the company will be compromised, due to the proximity of the presidential elections of 2022 and the dead ends in the process. Responsible for detecting possible irregularities in the process, reducing the chances of judicialization of the sales process and providing legal certainty to interested parties, the Federal Court of Auditors (TCU) has twice postponed the final approval of the privatization of the public enterprise.

According to the newspapers “O Globo” and “Valor”, the court identified a lack of sufficient information on the company’s pricing and the parameters used to calculate the value of contracts, in addition to the lack of studies on physical guarantees for hydroelectric power stations belonging to Eletrobras.

After the approval of the TCU, there are still three steps to complete the process: the analysis of the approval by the Securities and Exchange Commission (CVM) and the general meeting of shareholders of Eletrobras itself, and the sale actions and de facto capitalization.

In addition, there is an expectation from the government regarding the privatization of Correios in 2022, recently announced by Guedes as a “priority” for next year. However, the project which paves the way for the privatization of the company is awaiting analysis by the Senate Economic Affairs Committee (CAE).

Rapporteur of the proposal to the committee, Senator Otto Alencar (PSD-BA) decided to postpone the appreciation of the PL due to opposition resistance and technical doubts expressed by the parties in the House.

Not only outside analysts, but members of the economics team itself are not very optimistic about the possibility of approval, saying the proposal’s analysis window will have ended in 2021.

The Special Secretary of the Investment Partnerships Program (PPI), Martha Seillier, specifies that the privatization of the Post should only take place under President Jair Bolsonaro if Congress approves the bill on the subject by April to later. Without the amendment to the law, the government would only proceed with the public consultation stage.

“Without approval of the project, the process does not go through the Court of Auditors [da União, o TCU] who will verify precisely the legality of what we do, if there has been approval from Congress. This is where the Senate starts to get in the way of the process, “Martha told” Valor. “

Balance sheet of public enterprises

In total, there are 189 federal state corporations, of which 46 are under the direct control of the Union, as indicated by the Treasury in the last Union Participations Bulletin, for 2020 and published in December. Although the number of directly controlled companies remained similar between 2019 and 2020, “the continuity of the privatization process is evident, with more companies being directed towards studies aimed at their privatization or dissolution”. The value of Union shares in the 46 directly controlled companies increased by 9.91% between 2019 and 2020, from R $ 362 billion to R $ 398 billion.

The collection with the agenda of privatizations and concessions is very far from the objective set by Bolsonaro at the start of his mandate, of at least 2,000 billion reais. So far, 185 billion reais have been raised through privatizations and concessions, according to the report of the 19th meeting of the Council of the Investment Partnerships Program (PPI).

Although it has not been able to privatize any state-owned enterprise under its direct control, the federal government is concentrating on the privatization of subsidiaries, notably Petrobras and Eletrobras. “There has been a significant reduction in the number of indirectly controlled companies with the continuity of the process of selling the assets of important controlled companies”, specifies the Treasury.

A recent PPI report indicates that in 2021 four companies were privatized, a process that generated around R $ 27 billion in revenue for public coffers.

“There is a feeling of disappointment [com relação à agenda de privatizações], but we cannot say that the government did nothing. That would be exaggerated ”, assesses Ulisses Ruiz de Gamboa, economics professor at Insper. “You can’t say it’s scorched earth. He did not live up to expectations, yes, but there were achievements ”.

According to the PPI, at least 13 privatization projects are expected to take place in 2022, related to the following public enterprises:

EletrobrasCodesaABGFTrensurbCorreiosSerproDataprevEmgeaCesasaminasNuclepPorto Organizado de Santos (SP) CBTU / MG + line 2 metro BH

While the area of ​​privatization is advancing at a slower pace, that of concessions has made significant progress. Also according to the PPI report, published on December 16, 60 auctions took place in 2021. The planned investment in the projects is BRL 334 billion, in addition to the BRL 51 billion in subsidies. In total, if we consider since the start of Bolsonaro’s mandate, 131 projects and auctions have been completed, with an expected investment of BRL 822.3 billion and BRL 148.3 billion in subsidy collection.

As for cash receipts, the Treasury report specifies that, “compared to 2019, the Union received much less dividends in 2020, reflecting the expectations made the previous year and a lesser distribution of results with the Covid pandemic -19. BRL 6.6 billion in 2020, compared to BRL 20.8 billion in 2019. Some companies did not distribute on the basis of profit for the year and kept the allocation percentage to a minimum.

The transfers of resources for maintenance and investment by public enterprises continued on a “growth path”, according to the Treasury (18.97 billion reais in 2020, against 17.97 billion reais in 2019). “The average degree of dependence of dependent public enterprises remained above 90% in 2020,” he says.

Also according to the survey, in 2020, a smaller number of state-owned enterprises made profits. There were 24 companies while in 2019 this number was 29. On the other hand, 23 directly controlled public companies recorded a net loss, in particular EBSERH (7.3 billion reais); Embrapa (R $ 3.5 billion) and Infraero (R $ 2.3 billion).

Creation of public enterprises

Contrary to the promise to reduce the state’s participation in the economy, on the other hand, in his administration, Bolsonaro has already created two state-owned enterprises. The first of these was created in 2020: NAV Brasil, under the command of the Ministry of Defense, was responsible for controlling the air navigation of Infraero.

In December 2021, Bolsonaro further created ENBpar, which will be responsible for managing Itaipu Binacional and Eletronuclear, Eletrobras subsidiaries that cannot be privatized with the company.

Lack of support in Congress for the liberal agenda

From Gamboa’s point of view, the ambitious privatization program promised by Bolsonaro cooled when the government established an alliance with the “Centrão” in search of political support. With the movement, the political factor was hampered in the “privatizing impulse” of the government, says the expert.

“These alliances make it difficult to advance a privatization process in which the government sells businesses and generates income, but, on the other hand, it is something that means fewer positions, less funds,” he said. “The privatization program announced by Guedes was quite ambitious, and we hoped that this would actually happen as part of the fiscal adjustment. But, a posteriori, the results were much lower than what we expected ”.

Guedes admits the lack of political capital to move the agenda forward. “What is the plan for the next few years? Continue the privatizations. Petrobras, Banco do Brasil, everyone in line, is sold and it turns into social dividends. I come here full of ideas, projects and dreams. Now it is politics that governs the whole process. It can stop, it can slow down, it can interrupt, ”said the minister during an event organized by the International Chamber of Commerce-ICC Brazil.

According to the Treasury in the Bulletin, “in 2020 there was no effective reduction in the number of businesses directly controlled by the federal government, confirming the fact that this is a process that is really taking time. time for its implementation, regardless of the vicissitudes of a completely atypical “.

Still in Gamboa’s view, despite promises, Bolsonaro might not be really convinced about privatizations and the idea of ​​reducing state participation in the economy. The president himself admitted in September that his military training made him a “statist”, but that he began to support Guedes’ privatization policy.

“I was statist, I was completely. It was my military training. Then I saw that it wasn’t working, ”Bolsonaro said in an interview with“ Jovem Pan ”.

Still for the specialist, the ideological question, although present in the discussions, has little weight at the time of decision-making. “Policies are pragmatic. That’s the point, IMHO there is no old policy and no new policy. The policy is the same as always, there is an exchange of favors, ”he said.

As for the privatization of La Poste, Ulisses reminds that this is a sensitive issue and, even if it were approved, it would not be completed. “In Congress, the climate is for the election, and the government is also in re-election mode. There are other political forces that are organizing, alliances, people are much more concerned with organizing the elections, ”he said.

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