Brazil Believes Privatizing Federal Assets Is the Only Way Out of the Hole

    Railways are also on the auction block

    Railways are also on the auction block Brazil’s new government has announced a multibillion dollar privatization plan in an attempt to pull the country’s economy out of the worst recession in eight decades.

    It plans to auction off operating licenses for oil and gas, electricity and infrastructure projects.

    Four airports in the cities of Porto Alegre, Salvador, Florianópolis and Fortaleza are expected to be sold by March, along with two port terminals.

    The government aims to raise US$ 24 billion from the concessions program, and will also offer contracts to private firms for a wide range of projects from building new roads to running mines.

    Railways are also on the auction block

    The program includes the concession of an already built railway as well as the long-delayed auction of rights to oil fields and hydroelectric dams in the first and second half of 2017.

    President Michel Temer, who took charge of the country two weeks ago following the impeachment of predecessor Dilma Rousseff, said the privatization plan will boost growth and jobs.

    “We need to open up to the private sector because the state cannot do everything,” Temer told ministers.

    The concessions will offer “realistic” rates of return and have guaranteed long-term financing from state banks or will be raised on capital markets through bond sales, said Wellington Moreira Franco, who is responsible for boosting private sector involvement in Brazil’s infrastructure.

    “We will restore confidence by expanding the legal security for investors,” he said.

    According to the Organization for Economic Cooperation and Development, Brazil’s economy contracted 3.8 percent in 2015, and is expected to shrink a further 4.3 percent this year. Unemployment in the country is in double digits and inflation is nearly 10 percent.


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