by Bernardo Caram
BRASILIA (Reuters) – Celebrated by the economic team as a sign of the strength of the private sector, figures referring to investment commitments in infrastructure projects in Brazil through concessions organized by the Jair Bolsonaro administration were boosted by Petrobras, a state-owned company controlled by the federal government, owner 50.26% of the company’s common shares. An internal survey by the Ministry of Economy shows that more than half of the promise of investments in the country in the next ten years was made by the oil and gas sector, which has a massive presence of Petrobras.
Of the 925 billion reais in investments planned in all areas, approximately 487 billion reais are related to the oil sector –52.7% of the total. The data, compiled from the Investment Monitor of the Ministry of Economy, were confirmed by two ministry sources on condition of anonymity due to the period of electoral closure in the government. Two operations in particular have substantial amounts, accounting for most of the 487 billion reais in investments promised by the sector: the Búzios block, worth 230 billion reais, in which Petrobras has a 90% stake; and the sixth round of bids under the pre-salt production sharing regime, worth 146 billion reais, with 80% of the state-owned company’s share.
According to one of the sources, the oil sector is historically expressive in the share of private investments in the country. In recent years, these expenses have been concentrated in pre-salt exploration projects. Sought by Reuters, the Ministry of Economy said the data refer to investment values of structured contracts authorized by the federal government, including concessions, public-private partnerships (PPPs) and leases, among others. The ministry justified the presence of Petrobras in the survey. “If we considered Petrobras’ participation as public investment, we would be misaligned with the fiscal statistics produced by the National Treasury and Central Bank, which do not consider the state-owned company within the concepts of General Government and the non-financial Public Sector”, he said.
Petrobras stated that it invests responsibly, allocating resources to “projects with full potential to generate value” and contributions to its stakeholders. According to the state-owned company, the plan for the next five years foresees investments of 68 billion dollars (356 billion reais), “confirming the company as one of the largest investors in the country”. , has governance codes and follows market policies, which led it to be criticized by President Jair Bolsonaro, who forced changes in the company’s command during the current management. Complaints usually focused on the state-owned company’s profit level and fuel pricing policy.
OTHER SECTORS
The list of the largest shares of investments promised to the country follows with the railways, in an amount of 159 billion reais in ten years (17.2% of the total) and electricity, with 98 billion reais (10.6%). . There are also investment commitments of BRL 52 billion in highways (5.6%), BRL 43 billion in water and sanitation (4.6%) and BRL 42 billion in telecommunications (4.5%). Other areas add up to around 44 billion reais (4.8%). The data consider all projects contracted or auctioned with the participation of the federal government, including some state tenders that have been structured by the Federal Government. The numbers do not include exclusively state or municipal concessions. One of the sources also explained that the numbers refer to the initial investment commitment established in the contract for the construction of the assets, not including investments related to the operation of the enterprise or replacement of assets.
CHANGE OF AXIS The economic team of the current government advocates a change of axis in investments in the country, amid the exhaustion of the public machine’s spending capacity, encouraging the private sector to expand its presence in infrastructure projects.
The position contrasts with the view of former president Luiz Inácio Lula da Silva, who leads the polls for voting intentions for the October presidential elections – Bolsonaro, who is seeking re-election, appears in second position. The PT team defends a resumption of the capacity of public investment as a way to stimulate the economy, justifying that the measure would also boost the private sector. The total number of investments by companies has been routinely used in public events by the Minister of Economy, Paulo Guedes, as a way of illustrating this shift in the private sector. He justifies that the new scenario was made possible by changes in infrastructure legal frameworks, with measures proposed and approved by the current government. “We have 890 billion investments already contracted, investment commitments, large Brazilian and international companies paid us 160 billion reais in down payment for the right to invest 890 billion reais over the next ten years,” he said at an event in August. Since that speech, the numbers have been updated by the folder. In addition to reaching 925 billion reais in investments, the value of grants for projects reached 177 billion reais, according to data from the ministry.
(By Bernardo Caram; edited by Isabel Versiani and José de Castro)
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