Under Lula, only two state-owned companies remain in the privatization plan

The government Luiz Inacio Lula da Silva (PT) withdrew practically all state-owned companies that were included in the PND (National Privatization Plan) in the administrations Jair Bolsonaro (PL) and Michel Temer (MDB). But it keeps two on the list of possible privatizations: CBTU (Brazilian Urban Train Company) and the Trensurb (Porto Alegre Urban Train Company).

Since the PT member returned to the Planalto Palace, there have been excluded from the privatization list or at least 10 public companies are in the process of being privatized, such as Mail and the EBC (Brazil Communication Company). Then, it went out the Port of Santos and more recently the Ceagesp (São Paulo Warehouses and General Stores Company).

CBTU and Trensurb are the only ones that survive in the plan, which is administered by the PPI (Partnership and Investment Program) Secretariat of the Civil House. The first operates the urban train systems in four capitals of the Northeast: Recife, Natal, Maceió and João Pessoa. The second is responsible for the Porto Alegre subway.

Although they remain, there is still no decision. According to the Poder360there is no decision within the government as to whether the companies will actually be privatized. Studies are being carried out by BNDES (National Bank for Economic and Social Development) to evaluate models for partnerships with the private sector. Only after that will the Planalto decide.

Traditionally averse to privatization, the Lula government has assessed that the case of the two companies is atypical. The fact is that the subway systems of the two state-owned companies are outdated, with many trains in disrepair and, in some places, the network has not been expanded for years.

Both Trensurb and CBTU are in deficit. They depend on transfers from the National Treasury to cover operating costs. They closed 2023 with a net loss of R$44.8 million and R$220.2 million, respectively. In other words, they have no investment capacity.

According to the Poder360the complete privatization of the two state-owned companies is the least likely path. But the government can sell or grant concessions to shares of the companies, such as by lines or by systems/cities.

A possible model would be what was done with the Belo Horizonte subway in 2022. The CBTU operation in Minas was state-owned, and then the local government, headed by Romeo Zema (New) carried out privatization.

This is an option evaluated mainly for Pernambuco. The idea defended by the government Rachel Lyra (PSDB) would involve disintegrating the Recife subway system from CBTU, turning it into a state-owned system, making initial investments by the local government and then privatizing it.

In Rio Grande do Sul, the management of Eduardo Leite (PSDB) is also enthusiastic about the idea. The governor even acted to ensure that Trensurb was not removed from the PND and that the BNDES studies could continue.

Civil House: alternatives for investments

To the Poder360the Ministry of Civil Affairs said that state-owned companies CBTU and Trensurb remain in the PPI “as alternatives are studied to attract investment to modernize the public rail passenger transport systems operated by these companies”.

The ministry stated that the aim of these studies is to improve the quality of life of users by reducing travel time and increasing the safety and regularity of the service, while maintaining the current tariff structure.

“New guidelines for modeling studies for Trensurb and CBTU will be released as soon as a formal decision is made by the competent government bodies”he informed.

The government of Pernambuco stated that it asked the federal government to prioritize investments in the Recife subway system to ensure that users are served safely and with quality. It said it was available to build the necessary and possible solutions.

“Currently, the necessary studies are being developed by BNDES to diagnose and propose the best model to ensure these investments and improve the equipment”says the government of Pernambuco, which also stated that CBTU Recife will receive investments of R$136 million through the New PAC (Growth Acceleration Program).

The government of Rio Grande do Sul stated that “is a partner in the Trensurb privatization project and follows the studies promoted by the federal government”.

Information in this report was previously published by Driveexclusively. The newsletter is produced for subscribers by the team of journalists at Poder360. Learn more about Drive here and find out how to receive all the main information about power and politics in advance.