The government should not sell any more assets this year; Eletrobras will be sold in 2021, says Salim.
Salim acknowledged that the goal of selling 150 billion reais in assets this year will not be met, pointing out that there is neither the climate nor the environment for privatizations.
BRASILIA (Reuters) - The Jair Bolsonaro government is not expected to sell any more assets until the end of this year due to the crisis and volatility caused by the coronavirus, an environment that also pushed the privatization of Eletrobras to 2021, stated the Special Secretary for Privatization of the Ministry of Economy, Salim Mattar.
In a presentation this Wednesday, Salim indicated that the privatization of Eletrobras is now expected to take place in the second quarter of next year, compared to the previous expectation that it would occur in October.
Despite the change in the timeline, he pointed out in a virtual press conference that the government still hopes to approve this year the bill that paves the way for Eletrobras to begin operations.
"As soon as this coronavirus crisis passes, around July or August, we want to resume the bill in the Chamber with a bit more force," he said.
"Now, regarding the sale of the company, we will evaluate it in the second quarter of 2021, to assess the market conditions and the terms of the sale."
Salim stated that, due to the impacts of the Covid-19 outbreak on the economy, it is "absolutely natural and understandable" that the government and the National Bank for Economic and Social Development (BNDES) have extended their schedule for privatizations and the sale of stakes.
Now, the Ministry of Economy expects the privatization of Correios (Brazilian postal service), Codesp (São Paulo's telecommunications company), and Telebras (Brazilian telecommunications company) only in 2022, compared to the second half of 2021 previously. For EBC (Brazilian Communication Company), the expectation remains the same for 2022.
Salim acknowledged that the goal of selling 150 billion reais in assets this year will not be met, pointing out that there is neither the climate nor the environment for privatizations after the government managed to raise 23,5 billion reais in the first months of the year with the sale of assets from BNDESPar, the investment arm of BNDES.
“We can’t sell the companies for next to nothing,” Salim stated. “We don’t believe there will be an opportunity to sell assets this year,” he added.
The secretary highlighted that, considering the stakes whose sale was planned, the net divestment to be made this year would be 70 billion reais, taking into account market values obtained this month.
"With the stock market at this level, it's not the ideal time to sell these investments, these holdings. We will have to wait for an opportune moment, when the market recovers, so that we can—depending on the value of these assets belonging to the taxpayer—sell these holdings at the best possible price," he stated.
"So we will have to wait for a period of time, which we cannot specify – whether three, six months, or four years. We cannot specify because, for example, the 2007-2008 crisis took eight years to recover from."
On Wednesday, the Ibovespa, the main stock market index, closed above 80,8 points. When Salim announced the target of 150 billion reais in sales for this year, on January 14, the Ibovespa ended the session at 117,6 points.
During the press conference, the secretary also stated that BNDES will withhold payments on Hybrid Capital and Debt Instruments (IHCD) to the Federal Government this year, with the funds being used to finance important sectors of the economy amid the crisis.