Electric bill

Eletrobras privatisation delayed by blackout and politics in Brazil.

One of Bolsonaro’s main electoral promises was to raise USD 1 trillion by privatising Brazil’s largest public companies. However, internal government feuds, opposition from rival parties and the Covid-19 pandemic halted any progress in this front, leading to the resignation of Salim Matar, Secretary for Privatisations at the Ministry of Economy.

To compound these delays, at the beginning of November, a transformer fire in the northern state of Amapá, managed by the Spanish company Isolux Corsán, resulted in a massive blackout, which affected 90% of the population and lasted almost three weeks. This has spooked several members of congress who now fear that privatisation could lead to similar problems in the future.

Despite this, a Senator for the Amazonia region and co-chair of the Economic committee in the chamber told us, “The Amapá fire will not stop the privatisation of Eletrobras but it will generate a healthy debate on the issue, which will give better transparency around the sale of the company.”

A Senator for Santa Catarina and a member of the Economic committee and the Infrastructure committee agreed, “What happened in Amapá is a convenient warning, which could even accelerate the process of Eletrobras’ privatisation. Politicians need proper regulation to ensure private electricity providers are accountable for technical failures.”

“Politicians need proper regulation to ensure private electricity providers are accountable.”

Senator for Santa Catarina, Brazil

A member of the Board of the Brazilian Centre of Infrastructure (“CBIE”) – an institute which often collaborates with the federal government – told us, “The Amapá incident is a convenient excuse to delay the privatisation. There are regions in the North East or Minas Gerais, where Eletrobras and its subsidiaries are flagship companies and the privatisation could have a negative impact on the 2022 presidential elections.”

The CBIE director added, “There are also elections for the president of the Federal Senate and the Chamber of Deputies in February 2021. If the incumbents are re-elected, there will be a higher chance for the privatisation to happen in 2021. However, if it doesn’t happen in the first half of 2021, it will not happen during this administration.”

“If it doesn’t happen in the first half of 2021, it will not happen during this administration.”

Board member of CBIE, Brazil

Thus, the next six months will be crucial for the privatisation of Eletrobras. The elections for the presidency of the Senate and the Chamber of Deputies in February 2021 will define whether the project can be done during Bolsonaro’s presidency. If Bolsonaro’s promise is not delivered throughout the first half of 2021, it will fall on the next president of Brazil.

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