Guedes says Petrobras and Correios are at risk and Eletrobras is condemned to irrelevance

Minister Paulo Guedes (Economy) stated this Wednesday (1) that Petrobras and Correios are at risk because of changes in their respective markets and that Eletrobras is condemned to insignificance for not having the resources to invest.

Guedes defended that the government continues to pursue privatizations and that abandoning this agenda could cost President Jair Bolsonaro (no party) support in the elections.

“We cannot say that everyone is well resolved now, it is good as it is, congratulations. No. We have to overcome ourselves, do much better and continue transforming the Brazilian economy,” he stated.

The minister said that state-owned companies became a focus of corruption and took the opportunity to criticize, without naming names, former president Luiz Inácio Lula da Silva (PT). Lula is in first place in the polls of intention to vote for the presidency in the 2022 elections and the main threat to the re-election of Jair Bolsonaro (no party).

“The future is green and digital, not with his hand smeared with grease like a former president who stands there all the time with his hand smeared with grease saying he wants Petrobras back. Back to what, to plunder? Back to what, if the future is green? It’s going to die sitting on that oil worth zero,” he said.

For Guedes, it is necessary to accelerate exploration in light of the scenario and the logic of selling soon so as not to lose the asset’s value also applies to the oil company. “Petrobras is at risk. In 5, 10, 15 years, the world will make the transition away from oil, it will leave with the electric car,” said Guedes.

“We are not managing to get the oil off the ground. It does not come out at the speed necessary to eradicate misery, poverty. So our challenge is to manage the state-owned companies well, but sending them to the market,” he said.

When talking about Eletrobras, Guedes said that the state-owned energy company needs to invest a high amount in the coming years and does not have the financial capacity. He stated that the company is “doomed to irrelevance” and that the problem is not only that it is not able to invest, but also that it prevents private companies from investing.

“Eletrobras would have to invest BRL 15.7 billion every year just to maintain the supply of electricity [em caso de crescimento mais expressivo do Brasil]. It only manages to invest R$3.5 billion a year, so it is doomed to irrelevance. If Brazil grows, it disappears. If Brazil stays tiny, stuck, in recession, it will continue to be important,” he said.

A similar diagnosis about the future was made in relation to Correios, which the government also wants to sell. “There is no longer any letter, so the Correios will have to become a logistics company. And there is a risk that, in two or three years’ time, it will be irrelevant,” he said.

“Because Mercado Livre, Magazine Luiza, everyone who is doing digital sales is preferring to set up their own logistics company. So either it sells or it loses value,” he said.​

Guedes said in September that the government’s ten-year plan includes unrestricted privatization of state-owned companies, including Petrobras and Banco do Brasil. Even so, he pondered that who sets the timing for the effective realization of privatizations is the policy.

President Jair Bolsonaro stated on November 22 that the government has been working for the privatization of companies such as Correios and Eletrobras and, remembering that most of them depend on the approval of the National Congress, he complained that the processes are not moving forward.

The president said that the privatization process is not just about “putting it on the shelf” and advertising to buyers. “Most of them pass through the Parliament. We are fighting for the Post Office, for Eletrobras… It’s not going,” he said.

Eletrobras last month updated the schedule for its privatization, predicting that the “follow-on” operation will take place until May of next year.

The bill that deals with the privatization of Correios, on the other hand, is pending a vote in the Senate’s CAE (Economic Affairs Commission).

Guedes had already suggested privatizations as one of the main proposals during the 2018 election campaign. “We estimate that the debt volume will be reduced by 20% through privatizations, concessions, the sale of real estate properties by the Federal Government and the return of funds to official financial institutions. Some state-owned companies will be extinguished, others privatized and, in their minority, due to their strategic nature, they will be preserved”, stated Bolsonaro’s electoral program in 2018.

Despite this, the minister arrives on the eve of the 2022 electoral calendar without sales of entire companies – although divestments have advanced within companies and their subsidiaries, as in the case of Petrobras.

The minister himself said he was frustrated for not having fulfilled the objective. “I’m very frustrated that we’ve been here for two years and we haven’t been able to sell any state-owned company. It’s very frustrating,” he said in November 2020.