Government expects Eletrobras privatization by January 2022

RIO DE JANEIRO, BRAZIL – The Brazilian government expects to complete the privatization process of Eletrobras  by January 2022, amid expectations that the provisional measure opening space for the operation may be voted in the Chamber of Deputies in the week of May 17th, said the Ministry of Economy’s Secretary for Privatization, Diogo Mac Cord, on Thursday.

The bill also needs to be considered by the Senate before June 22nd in order for the Provisional Measure not to expire.

“The support that Congress has given to the new text of the Eletrobras Provisional Measure, which is very different from the original one in the past, is fantastic. We managed to work out an agreement that is a huge win-win,” said Mac Cord, stressing the partnership with the rapporteur of the matter, deputy Elmar Nascimento (DEM-BA).

The Secretary pointed out that the May 17th week deadline has been raised by the rapporteur himself.

“The deadline for us to complete the entire operation, when we set the whole schedule of the TCU (Federal Audit Court) neatly, the operation is completed in January 2022,” said the secretary. According to government estimates, the privatization of Eletrobras would yield R$25 (US$4.74) billion to the Treasury, from the payment of the concession fee by the company for renewing contracts for its hydroelectric plants.

A similar amount should be paid by the company to relieve tariffs over time into the so-called Energy Development Account (CDE), a fund that covers several subsidies incorporated in energy costs.

Correios (Postal Service) and others

The Correios privatization is another of the government’s projects for this year, with the public notice to be launched in November and the privatization to take place in a maximum of three months thereafter, said the Secretary.

In the case of the postal company, Mac Cord points out that the most significant issue will not be the amount collected, which tends to be negligible, but rather the impact that privatization will have in terms of increased investment and efficiency.

Other companies controlled by the federal government scheduled to be privatized this year are Ceasaminas, Companhia Docas do Espírito Santo (CODESA), Empresa Gestora de Ativos (EMGEA), Trensurb, and the branch of the Companhia Brasileira de Trens Urbanos (CBTU) operating in Belo Horizonte.

Mac Cord accepted responsibility for criticism of the slow pace of the government’s privatization program, pointing out that the Executive branch may have failed to better communicate its progress.

“The government’s privatization program is not and has never been stalled, quite the opposite. No one has managed to do all that we have accomplished in such a short period of time,” said the Secretary.

In addition to the privatizations planned for the coming months and the inclusion of a total of 15 state companies in the National Privatization Program (PND), Mac Cord said that the divestitures made since the beginning of the government totaled over R$200 billion.

Of this total, R$33.5 billion referred to the sale of the Transportadora Associada de Gás (TAG), a Petrobras subsidiary. In addition, several groups of airports and seaports were recently privatized.