Correios: Brazil government to sell all state-owned postal company in single auction

RIO DE JANEIRO, BRAZIL – Brazilian state-owned postal service Correios will be sold to a single buyer in an auction scheduled for March, 2022. A bill approving this sale must be passed in Congress as it involves changes in regulation.

The government has now defined the Correios privatization model. The bill the Ministry of Economy intends to have passed in the Chamber of Deputies next week provides that the federal government will sell 100% of the company’s capital.

The decision was announced by the Ministry of Economy’s special secretary for Privatization, Disinvestment and Markets Diogo Mac Cord.

The aim is to sell the control of the company in full, in the format of a traditional auction or, as Mac Cord summarizes, “by opening envelopes.”

The buyer will take over both Correios’ assets and its liabilities, such as debts. The model differs from plans for Eletrobras and what was recently done in BR Distribuidora, a former Petrobras subsidiary, based on capital market operations.

The sale of Correios is also expected to generate changes in the regulation of the postal sector, which would become the responsibility of the National Telecommunications Agency (ANATEL) under a new name.

Chamber of Deputies privatization agenda

The Chamber of Deputies on Tuesday, July 6, may vote on the Bill 591/21, which authorizes the Correios privatization process and eliminates the company’s monopoly on postal services.

Currently, the private sector is present in the operation of services through franchises, but prices are in line with the published tables of the Brazilian Post and Telegraph Company (ECT), which has a monopoly on various services.

According to the bill, the monopoly for letters and postcards, telegram and grouped correspondence, will remain with the state-owned company for another 5 years but may be restricted by Executive decree.

Grouped mail occurs when several objects are gathered in a single postal dispatch and at least one of them is subject to the state monopoly, such as parcels, for example.

This group makes up the so-called universal postal service, and its universalization, when provided by ECT, will be conditioned to the federal government’s available budget for state-owned companies, as they are low-income postal services offset by the company’s profit from other operations now released to competition.