Brazil's Eletrobras Will Be Sold in 2020, Privatization Czar Says

(Bloomberg) -- A long-delayed plan to capitalize and privatize Brazil’s Eletrobras will move forward this year, Privatization Secretary Salim Mattar said amid concerns that delays in the sale of the power utility may force the government to freeze part of its budget.

“Eletrobras will be capitalized in 2020,” Mattar said in an interview at Bloomberg’s Sao Paulo office. “It’s irresponsible to say that Congress won’t approve the bill that allows the privatization this year.”

Plans to privatize Centrais Eletricas Brasileiras SA, as the company is formally known, started during the administration of President Michel Temer in 2018, but have since made little progress. Before it moves forward, lawmakers have to back the thorny privatization bill months before municipal elections in October.

Read More: Brazil May Freeze $3.8 Billion from Budget on Eletrobras Woes

Mattar acknowledged the government still needs to provide more details on the project to senators, but said he’s confident that lawmakers who proved “sensible and responsible” by approving a pension overhaul last year will come together and pass the Eletrobras bill now.

“We don’t have money to invest in Eletrobras,” he added.

Bureaucracy Challenge

After a year as President Jair Bolsonaro’s privatizations czar, Mattar said his biggest challenge is the bureaucracy and legal mazes that exist in the public sphere. Previous governments have taken about 30 months to privatize companies, according to him. His goal is to sell 150 billion reais ($36 billion) in assets this year -- a plan that’s set to start in early February as development bank BNDES sells a 23.5 billion-real stake in state-run oil producer Petroleo Brasileiro SA.

BNDES, which was once one of the largest development banks in the world, is shedding its stock holdings, currently at about 100 billion reais. BNDES could sell its entire portfolio, Mattar said, if Brazilian markets continue doing well -- stocks have set repeated records since last year as investors look for yield as interest rates drop.

He added, however, that the sales will be done carefully to not erode market value. The money will be used to repay the Treasury.

Of the more than 600 state companies mapped by the administration, Petrobras, Banco do Brasil and Caixa Economica Federal will remain under government control, Mattar said. The government has already hired studies to sell the postal service.

To contact the reporters on this story: Rachel Gamarski in in Sao Paulo at rgamarski@bloomberg.net;Julia Leite in Sao Paulo at jleite3@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, Walter Brandimarte

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