brazil investment forum · direct and indirect control 36 petrobras 30 eletrobras 16 banco do...

Salim MattarSpecial Secretary of Privatization and DivestmentMinistry of the Economy

April 3nd, 2019economia.gov.br

Brazil Investment ForumMicro reforms to boost investment

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Our economy we will be recognized by trust, by promoting the national interest, the free market and efficiency. The trust that agreements and property rights will be respected.

Jair Messias Bolsonaro38º President of Brazil

Inauguration Speech, Jan. 01st, 2019

We will work towards macroeconomic stability, by respecting contracts, privatizing and balancing public budgets. Brazil’s market is still somewhat closed to international commerce and change this condition is one of the main commitments of this government.Speech in Davos, Jan 22th, 2019

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President Bolsonaro, Mar. 19st, 2019

The privatizations in Brazil aim to battle against corruption and to boost income and jobs. We keep following our campaign proposals: to take out from the Government everything that can be run by the private sector

Jair Messias Bolsonaro38º President of Brazil

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We will move towards a liberal democracy. We will open the economy and we will privatize.

Paulo Roberto Nunes GuedesMinister of the Economy

Inauguration Speech, Jan 02th, 2019

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The merger of 4 ministries resulted in...

...the Ministry of the Economy

Finance PlanningIndustry and

Trade Labor Ministry ofthe Economy

6

Special Secretary for Productivity, Employment

and Competitiveness

Special Secretary for De-

bureaucratization, Management and

Digital Government

Special Secretary of the Federal

Revenue Service

Special Secretary of Finance

Secretaria Especial de

Desestatização e Desinvestimento

Special Secretary for

Social Security and Labor

Special Secretary for

Trade and International

Affairs

Ministry of the Economy

Special Secretary for Privatization and Divestment

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•Social security reform

•Oil transfer of rights

•Eletrobras Capitalization• Privatizations

• State financial restructuring

• Infrastructure concessions (PPI)

• Deleverage BNDES to privatize the lending market

• Reduce the debt

Government Priorities

R$ 1 trillion

To federalize regional SOE’s

Crowding in

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Domestic Federal Public Debt

R$ 3.8 trillion

9

USD 20 billion

Privatization target for 2019:

10

Ministry of theEconomy

Special Secretary for Privatization and Divestment

Secretary of Coordination and Governance of State-owned

Companies - SEST

Secretary for Coordination and Governance of Assets - SPU

134 State-ownedcompanies

743.322 properties

11

12

13Sale of a large part of the asset portfolio...

...to reduce debt

SOE’s

subsidiaries

State-owned

companies

Other

state

assets

Listed equityinvestments

Properties$

14

Assets to reduce the debt

R$ billions

85

270

990*

State-owned companies

Bank credit (IHCD)

BNDES loan

Properties 30

490

* Figures for illustrative purposes only.

Concessions 115

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•Privatizations 943Petrobras – Pasadena 562

Petrobras – Paraguay’s Distributors 381

•Divestments 646

Caixa FGEDUC - IRB 646

•Concessions 1.84412 airports 1.085

Railway North-South 703

4 Ports 57

Total 3.433

Privatization is already happeningUS$ (million)

16The purpose of selling SOE’s...

... is to improve the competitive environment and reduce debt. Source: BCB Elaboration: SEST/SDD/ME

Domestic Federal Public DebtR$ trillion

1,11,2 1,3

1,41,5

1,51,6 1,7

1,9

2,1

2,9

3,43,7

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*

3,8

17In 2010, state privatization could havesaved more than 60% of our debt ...

... and would substantially change its profile.Source: BCB/SPE Elaboration: SEST/SDD/ME

Value of SOE’s relative to public sector net debtPublic sector net debt (R$ trillion)Value of state-owned companies / net debt

1,5 1,5 1,6 1,7

1,9

2,1

2,9

3,4

61% 59% 56% 54% 46%31%

28% 27%

2010 2011 2012 2013 2014 2015 2016 2017

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Constitution – Art. 173

“Except for the cases provided for in this Constitution, the direct exploitation of economic activity by the State shall only be permitted when necessary to the imperatives of national security or the relevant collective interest, as defined by law.”

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#State owned companies

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#State owned companies

Brazil 440

21

#State owned companies

134

Brazil

Union

440

22

#State owned companies

134

51.341

Brazil

Union

China

440

23Federal state-owned companies Direct and indirect control

36 Petrobras30 Eletrobras16 Banco do Brasil03 BNDES02 Caixa01 Correios

18

28Non-dependent

Dependent

Companies under Federal Govt. controlState-owned companies dependent on the National TreasuryState-owned companies not dependent on the National TreasuryNon-dependent state enterprises with indirect control of the

Federal Govt.

Number of Subsidiaries

134 Federal State-ownedcompanies

Group

46DirectControl

88IndirectControl

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Source: SEST/SDD/ME

R$ 15 billion/year

The 18 dependent SOE’s burns a high bill to the taxpayer

• EBSERH• EMBRAPA• CONCEIÇÃO• HCPA

• CONAB• CBTU• CPRM• CODEVASF

• EBC• NUCLEP• INB• AMAZUL

• VALEC• TRENSURB• IMBEL• EPE

• CEITEC• EPL

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In the first nine months of 2018, the BB, BNDES, Caixa, Eletrobrasand Petrobras groups showed a combined profit of R$ 52 billion.

Source: SEST/SDD/ME

-32

5

25

52

2015 2016 2017 9M18

From Oct/15 to Dec/17, SOE’s went from losses to profits

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•Petrobras

•Banco do Brasil

•Caixa Econômica Federal

•BNDES

State-owned companies that won’t be privatized

• Ebserh

• HCPA

• GHC

• Embrapa

• Amazul

• Emgepron

• CPRM

• Imbel

27Breakdown by Industry

Regional Development• Codevasf

Health• Ebserh• HCPA• GHC

Communication• ECT• EBC• Telebrás

Source: SEST/SDD/ME

39

20

18

14

7

7

6

5

4

4

3

3

3

1

Energy

Oil and Gas

Finance

Commerce and Services

Transformation Industry

Ports

Research, Development and Planning

Insurance

Transportation

Equity investments

Supply

Communication

Health

Regional Development

28

Equity investments• 5283 Participações• BB Elo Cartões• Caixapar• Correiospar

Source: SEST/SDD/ME

Breakdown by Industry

39

20

18

14

7

7

6

5

4

4

3

3

3

1

Energy

Oil and Gas

Finance

Commerce and Services

Transformation Industry

Ports

Research, Development and Planning

Insurance

Transportation

Equity investments

Supply

Communication

Health

Regional Development

Supply• Conab• Ceagesp• Ceasaminas

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Transportation• CBTU• Trensurb• Valec• Infraero

Insurance• ABGF• BB Corretora• BB Seguridade• BB Seguros• Caixa Seguridade

Source: SEST/SDD/ME

Breakdown by Industry

39

20

18

14

7

7

6

5

4

4

3

3

3

1

Energy

Oil and Gas

Finance

Commerce and Services

Transformation Industry

Ports

Research, Development and Planning

Insurance

Transportation

Equity investments

Supply

Communication

Health

Regional Development

30

Research, Development and Planning• Embrapa• Amazul• EPE• EPL• Emgepron• CPRM

Ports• CDC• Codesa• Codesp• CDP• CDRJ• Codern• Codeba

Source: SEST/SDD/ME

Breakdown by Industry

39

20

18

14

7

7

6

5

4

4

3

3

3

1

Energy

Oil and Gas

Finance

Commerce and Services

Transformation Industry

Ports

Research, Development and Planning

Insurance

Transportation

Equity investments

Supply

Communication

Health

Regional Development

31

Transformation Industry• Araucária• Ceitec• CMB• Imbel• INB• Nuclep• Hemobrás

Commerce and Services• Ativos Gestão• BB Cartões• BB Turismo• BB Tecnologia e Serviços• Dataprev• E-Petro• Serpro

• PCEL• PEL• PFL• PIB BV• PNBV• PSPL• TI B.V.

Source: SEST/SDD/ME

Breakdown by Industry

39

20

18

14

7

7

6

5

4

4

3

3

3

1

Energy

Oil and Gas

Finance

Commerce and Services

Transformation Industry

Ports

Research, Development and Planning

Insurance

Transportation

Equity investments

Supply

Communication

Health

Regional Development

32

Finance• Ativos S.A.• BAMB• BASA• BB• BB AG• BB Consórcio• BB Investimentos• BB DTVM• BB LAM

Source: SEST/SDD/ME

• BESCVAL• BNB• BNDES• BNDESPAR• BNDES PLC• Caixa• Emgea• Finep• Finame

Breakdown by Industry

39

20

18

14

7

7

6

5

4

4

3

3

3

1

Energy

Oil and Gas

Finance

Commerce and Services

Transformation Industry

Ports

Research, Development and Planning

Insurance

Transportation

Equity investments

Supply

Communication

Health

Regional Development

33

Oil and Gas• Petrobras• BR• Bear• Brasoil• Gaspetro• Gás Brasiliano GBD• Liquigás• Logigás• PAI• PB-Log

• Pebis• Pemid• PIB Col• PM• PPSA• Transpetro• Stratura Asfaltos• TAG• TBG• Pbio

Source: SEST/SDD/ME

Breakdown by Industry

39

20

18

14

7

7

6

5

4

4

3

3

3

1

Energy

Oil and Gas

Finance

Commerce and Services

Transformation Industry

Ports

Research, Development and Planning

Insurance

Transportation

Equity investments

Supply

Communication

Health

Regional Development

34

Energy• Eletrobras• Arara Azul• AmGT• Bentevi• Brasil Ventos• Breitener• Breitener Jaraqui• Breitener Tambaqui• BSE• CGTEE• CHESF• EDV IX• EDV V

• EDV VI• EDV VII• EDV VIII• Eletronorte• Eletronuclear• Eletrosul• Eletropar• Eólica Chuí IX• Eólica Hermenegildo I• Eólica Hermenegildo II• Eólica Hermenegildo III• Fote• Furnas

• Mangue Seco 2• Ouro Verde I• Ouro Verde II• Ouro Verde III• Termobahia• Termomacaé Comercializadora• Termomacaé• TGO• TSBE• TSLE• Ventos de Angelim• Ventos de Santa Rosa• Ventos de Uirapuru

Source: SEST/SDD/ME

Breakdown by Industry

39

20

18

14

7

7

6

5

4

4

3

3

3

1

Energy

Oil and Gas

Finance

Commerce and Services

Transformation Industry

Ports

Research, Development and Planning

Insurance

Transportation

Equity investments

Supply

Communication

Health

Regional Development

35

Thank you!

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