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Former Minister Adolfo Sachsida Reveals That Petrobras Would Be on Track for Privatization If Jair Bolsonaro Had Won a Second Term.
In a decisive moment for the Brazilian economy, Adolfo Sachsida, former Minister of Mines and Energy (MME) during Jair Bolsonaro’s (PL) administration, reveals that Petrobras was on the path to being privatized had Bolsonaro secured a second term. The strategic plan involved the sale of the state oil giant within a maximum period of a year and a half after re-election.
Restructuring Petrobras: Competition and Privatization
The proposed privatization model aimed to foster competition in the Brazilian oil sector and expand the operations of Pré-Sal Petróleo S/A (PPSA), which was already in an advanced stage of its privatization process. The proposed law, which aimed to privatize Petrobras, would have, in fact, sent a 30-year future sales offering to Congress, with the potential to yield approximately R$ 390 billion.
Considerations for the sale of Petrobras arose amid discussions about the rise in fuel prices around May of the previous year. For Sachsida, creating market competition through the privatization of the state-owned company was one of the few solutions to ease the high prices.
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The Words of Former President Bolsonaro
Sachsida recalls in an interview with the newspaper O Estado de São Paulo the permission given by former President Bolsonaro to proceed with the privatization studies: “He said promptly: ‘go ahead’.” With this support, the then minister began the necessary discussions and studies to transform the state company into a private enterprise.
However, with the change in government, the scenario changed drastically. President Lula (PT) ordered the removal of Petrobras and several other companies, including the Post Office and Serpro, from the Investment Partnership Program (PPI).
Threat of Increased Indebtedness
Adolfo Sachsida warns of the potential financial risk that this reversal could represent for Petrobras. Removing the company from the PPI and discontinuing the practice of “import parity pricing” could result in an “excessive increase” in the company’s debt, negatively impacting its profitability and dividends.
For Sachsida, the best option for the country would be to “deconcentrate the sector, introduce competition, and reduce state intervention in the economy,” in clear criticism of the possible return of investments in refineries. He concludes: “The current government is not only contesting the agreement with Cade but also intends to build new refineries. I respect these ideas, but I disagree with them.”
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