October 13, 2018 / 5:34 PM / 4 days ago

Bolsonaro adviser favors selling Eletrobras generation assets

SAO PAULO (Reuters) - The top economic adviser to Brazilian far-right presidential front-runner Jair Bolsonaro said he favors selling off some of the power generation assets of utility company Centrais Eletricas Brasileiras S.A., raising new contradictions in the candidate’s policy team.

FILE PHOTO: Presidential candidate Jair Bolsonaro attends a news conference in Rio de Janeiro, Brazil October 11, 2018. REUTERS/Ricardo Moraes

Shares of the company, known as Eletrobras, soared following the clear lead Bolsonaro took in Sunday’s first-round vote, but then tumbled 13 percent on Wednesday when Bolsonaro said he would privatize transmission and distribution units but not the generation of electricity. Bolsonaro had previously promised to privatize some state-controlled companies.

But in comments to reporters late on Friday, his economic guru Paulo Guedes gave a contradictory view, saying he favored selling Eletrobras generation assets rather than transmission assets.

“Transmission, that’s very difficult, but in the case of generation there are cases where I would sell and others where I wouldn’t,” Guedes told reporters in Rio de Janeiro. “There are many cases of strong private generation.”

Bolsonaro has named Guedes, a University of Chicago-trained economist, to be his economy and finance super minister, a clear signal that he plans to be a market-friendly president if he defeats leftist Workers Party candidate Fernando Haddad in the Oct. 28 run-off vote.

Yet Bolsonaro has disavowed Guedes publicly on occasion, revealing wide divisions on policy among his team of advisers, which is divided between nationalists and free-market advocates. Divisions have emerged on taxation and wage policies and includes the potential privatization of Brazil’s largest company, state-run oil corporation Petrobras.

Commenting on his reluctance to sell core Eletrobras units, Bolsonaro cited a concern about Chinese domination, which has bought electrical assets in Brazil in the past two years.

“China isn’t buying in Brazil, China is buying Brazil,” Bolsonaro said. “Are you willing to leave Brazil in the hands of the Chinese?”

Eletrobras has assets in generation, transmission and distribution. Both Bolsonaro and Guedes have remained consistent that they are in favor of selling distribution assets.

Bolsonaro’s own record is not friendly to privatization. As a congressman, Bolsonaro has voted in the past to maintain Petrobras’ monopoly over exploration and production.

The privatization of Eletrobras is a vital step to help reduce Brazil’s wide budget deficit. The outgoing government of President Michel Temer had hoped raise some 12.2 billion reais ($3.2 billion) from the sale, but failed to win Congressional approval.

Reporting by Marcelo Rochabrun; Editing by Leslie Adler

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