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News > Latin America

Brazil: Eletrobras Privatization Proposal Moves Ahead

  • Eletrobras headquarters in downtown Rio de Janeiro, Brazil.

    Eletrobras headquarters in downtown Rio de Janeiro, Brazil. | Photo: Reuters

Published 10 May 2018

"The provisional measure is absurdly bad for the interests of the Brazilian people,” said Congressman Henrique Fontana.

Brazil's Congressional Joint Commission voted in favor of Provisional Measure 814/2017 (MP-814) Wednesday, which authorizes the privatization of Eletrobras and six of its subsidiaries. The move comes just one day after government opposition protests barred the legislative measure from proceeding.

Brazil: Government Appoints Commission To Privatize Eletrobras

“This is a report that determines the increase energy bills by roughly 5 percent. It facilitates the privatization process and sale of Brazilian public property. Even worse, it proposes that 20 percent of the Social Fund, money derived from Pre-Salt oil and Pre-salt gas that, until this moment, was reserved for investment in education and healthcare, will be withdrawn to finance a gas pipeline construction program,” said Congressman Henrique Fontana.

He summarized: “In general, the provisional measure is absurdly bad for the interests of the Brazilian people.”

The privatization of Petrobras isn't allowed under current legislation. However, in a move to circumvent the ban, the government, led by president Michel Temer, forwarded MP-814 to Congress. The state of Pernambuco's Justice Department had previously suspended the MP-814 after a request was made to the lower house, Brazil's Federal Supreme Court revoked the injunction, according to Brasil de Fato.

Having passed the measure, a special commission is now tasked with analyzing points made by lawmakers before the final vote in the lower house and senate.

MP-814 is only valid until June 1, and it is expected that the government will intensify its efforts to approve the measures in the coming weeks.

During a public hearing, Tuesday, workers, and representatives from social movements filled the lower house to protest the MP-814. Present at the conference were Eletrobras employees, members of the Landless Workers' Movement (MST), Unified Workers' Central (CUT), Popular Campesino Movement (MCP) and Popular Youth Uprising.

Eletrobras, through its subsidiaries, is responsible for 69 percent of Brazil's electricity distribution.

With Brazil's budget deficit calculated at reaching almost US$50 billion dollars as of August last year, the Temer administration has been preparing a privatization package that could net US$28 billion dollars by the end of 2018. However, seventy percent of Brazil's population is against privatizing state-owned companies, according to a December poll published by Datafolha.

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