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Petrobras: Is privatization the best way to transition?

by | Apr 11, 2022 | Brasile | 0 comments

Even with the fall in the dollar, the Brazilian economy does not seem to be doing well. All surveys show that the population directly blames the Executive, in the case of Jair Bolsonaro and Paulo Guedes, when the situation tightens in our pockets. That Paulo Guedes defends the privatization of Petrobras is nothing new. He himself has expressed this idea publicly several times and, being a neoliberal, from the Chicago school, this becomes even more expected. I mean, the main watchword that emerges from this form of economic thinking is precisely “privatization”. The state apparatus, for neoliberals like Paulo Guedes, is an enemy to be fought. But it is one thing to express coherent reasons for privatization of any kind, and quite another to have no meaning in the “why” of privatization.

Guedes, head of the Ministry of Economy, made a recent statement that it is necessary to privatize Petrobras because of the war in Ukraine. The link that links Petrobras to the war, for him, is that privatization becomes necessary to capitalize the company (in fact, not only Petrobras, but also Eletrobras). The company would be raising funds that the State can no longer provide, as if Petrobras, being a state-owned company, did not produce its resources itself. Thus, these resources would be necessary to carry out the transition from the current energy matrix, which is becoming increasingly obsolete, to a more up-to-date energy matrix for the days in which we live. This is because the whole world is already in this transition to get rid of gas and oil, as a way to get rid of the Russians (as I pointed out in a previous text). For this transition to take place, a high capitalization would be necessary, which only the privatization of the company could cover.

It turns out that to capitalize a company, it does not necessarily need to be privatized. Even more so when we are talking about a company that does not generate losses – this is also the case with Eletrobras. On the contrary, this company generates profits. A high-tech company that competes internationally. This company not only maintains itself, but also maintains Brazil. It is worth remembering that the director of the company, appointed by President Jair Bolsonaro, receives only R$260 thousand reais per month. A really low salary…

Private initiative distributes shares to shareholders who are looking for immediate rather than long-term profit. Even because they don’t save that money, or spend it enjoying life. They reinvest. Participation in the financial market is almost immediate, and the cycle does not end. Thus, for the private sector, carrying out medium and long-term programs becomes complicated. Unless it’s a private equity company from the start. This is the case of companies that come from traditional families, for example, which, upon entering the stock market, maintain a certain tradition of planning for the future. When a company is state-owned, it only makes a program for the future according to the government’s own future program.

So, to go through this transition, the most coherent thing is for the government to have this idea in its political-economic program, with the State being the largest shareholder (40%), and then directing the company to this.

The big problem is Petrobras’ misguided policy, with an incompetent federal administration for a long time. The Chamber of Deputies voting a single tax amount, as it did in 2021, or the Executive zeroing this tax, is very foreign to the Constitution. Brazil is characterized as a federative republic, and the thing is the tax that states determine the amount. Petrobras has to be managed with the central objective of subsidizing the workers, the poorest.

Today, the reality of inflated Brazil is of people cooking with wood, due to the high price of gas. It should be noted that biomass burning is the third leading cause of lung cancer. In other words, in addition to a terrible economic problem, it generates a public health problem. In the case of diesel, it directly affects the cost of transport and, consequently, of food. Obviously, the president’s popularity drops. For people this is straightforward: I vote for or against who is harming or benefiting me.


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