January 31, 2020 / 2:43 PM / 22 days ago

Brazil names Guedes to run privatization drive after shakeup

BRASILIA (Reuters) - Brazil put Economy Minister Paulo Guedes in charge of its drive to find investors to buy state assets, a presidential decree said on Friday, a day after the program’s deputy head was fired due to a controversy over improper use of an Air Force jet.

FILE PHOTO: Brazil's Economy Minister Paulo Guedes attends a Mercosur trade bloc summit, in Bento Goncalves, Brazil December 5, 2019. REUTERS/Diego Vara/File Photo

The move extends the broad authority Guedes already has over economic policy and he has said the government needs to speed up privatization of all state companies to help reduce its budget deficit and spur growth.

President Jair Bolsonaro said on Thursday he would remove the Investment Partnerships Program (PPI) from his embattled chief of staff Onyx Lorenzoni following a public uproar over the undue use of an Air Force executive jet by his deputy.

Since Bolsonaro took office a year ago vowing to reduce the size of the state´s role in the economy, the PPI program has run 36 auctions of public sector contracts that will eventually bring in more than $100 billion in revenue for the Treasury, its secretary Martha Seillier told investors in India last week.

The government hopes to raise a total 150 billion reais this year from privatizations of companies and concessions to build and operate roads, railways, ports and airports, in a drive to modernize the country’s deficient infrastructure.

Sources in the government told Reuters, however, that the privatization push has faced resistance, not just from lawmakers in Congress, but even from cabinet ministers.

A plan to sell the country´s postal service, for example, has been opposed by Science and Technology Minister Marcos Pontes, and its status is now being delayed by studies, one official who asked not to be named said.

The privatization of state-controlled Centrais Eletricas Brasileiras SA (ELET6.SA), or Eletrobras, faces opposition in Congress from lawmakers who want the government to retain a “golden share” in Brazil´s largest utility. The privatization bill has met resistance and it is not clear it will pass any time soon.

The sale of oil giant Petroleo Brasileiro SA (PETR4.SA), or Petrobras, is not considered politically feasible by industry experts due to nationalist sentiment against losing control over the state’s biggest asset.

Selling Petrobras would be the clearest signal yet that Brazil is serious about shrinking the state’s size and influence in business. But it is likely to remain a pipe dream over the remaining 3 years of Bolsonaro’s first term.

Reporting by Marcela Ayres; Writing by Anthony Boadle; Editing by David Gregorio

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