With privatist logic, prices do not fall, says economist. 'Country could stop this Friday'

By Rede Brasil Atual - There is the interest of shareholders who want to maximize profits to become richer, and there is the national interest. For economist Guilherme Mello, professor at the State University of Campinas (Unicamp), the policy adopted by the management of Pedro Parente, president of Petrobras, under the command of Michel Temer (MDB), follows the first option.

The significant increase in fuel prices in a short period of time triggered protests by truck drivers, which is beginning to trigger a supply crisis in the country. The protest enters its fourth day this Thursday (24) and, according to the economist, if there is no negotiated solution, the country will come to a standstill this Friday.

According to the economist, it is essential that the government change its fuel pricing policy to end the crisis. "It is important to provide stability for this fundamental input. In Brazil, fuel supplies the entire fleet that carries cargo, since we basically have trucks (...) This policy only benefits shareholders and the financial market," he told Rádio Brasil Atual.

According to Mello, the privatization process of Petrobras is one of the factors behind this policy adopted by the government. "In a privatization process – and this is the truth, Petrobras is being sold, and the government doesn't have the courage to do it all at once because people know it's a valuable asset – this current valuation policy is wonderful. You raise the company's shares because profits increase, and then you sell it."

"From the point of view of national interest, it is necessary to reverse this privatization logic. Both in pricing policy and in sales. They are selling pre-salt wells at a time when oil is appreciating. We are handing over wealth to foreign interests," the economist continued.

A solution is difficult in the short term if the state-owned company continues to operate in this way, but mechanisms exist. "We have the company that produces oil. I'm not saying to hold the price forever, but we have the ability to maintain stability during periods of high volatility. Just as the dollar rises, it falls. Just as the price of a barrel of oil rises, it then falls. It is possible, for a period of time, to adjust much more slowly to provide stability and accommodate the sectors."

According to Mello, the reduction of the Contribution for Intervention in the Economic Domain (Cide) tax, as proposed by the Temer government, has little effectiveness. "Other tax-related measures can be considered, but they are limited. One of the biggest tax burdens on fuels is the ICMS (State VAT), which is a state tax. It's much more difficult to reduce it than the Cide, which is relatively insignificant. Removing the Cide has little impact at the pump, while discussing the ICMS impacts the federal pact and the already strained state coffers," he explains.

Dark future

According to the economist, the next nightmare the country may face is related to Eletrobras, which is on the verge of being privatized. "If it is privatized, price volatility will increase. The pricing logic of private agents does not calculate what is best for the country, but what is best for themselves. In the case of Eletrobras, you will be privatizing the flow of our power lines. If it is privatized, we will relinquish control of several areas."

"A large part of our energy is generated through hydroelectric power. The management of the water regime must remain in the hands of the public authorities. We may experience more prolonged droughts, and this cannot follow a purely private logic. People may talk about regulatory agencies, but it's classic for them to be captured by the private sector. We are giving up oil and water, two essential resources," he said.

Another astonishing detail is the fact that proponents of privatization claim that the market regulates itself more efficiently. "We are handing over strategic areas to foreign investors and, often, state-owned companies in their own countries. When you privatize, you say that the state is bad, that it doesn't work, then you sell Petrobras to Chinese and European state-owned companies. They are state-owned companies just like Petrobras."