Privatization it is the practice in which a company or public institution is sold to the private sector. In this case, the State ceases to manage a certain entity, passing it on to a private company. This term can also refer to the transfer of control of the shares of a certain public company to a private company. It is noteworthy that privatization can take place in a company, in an investment or in land.
Read too: Economy of Brazil
Privatizations in Brazil
Privatizations in Brazil started in the 1980s with the Special Commission on Privatization.
Check out a list of some privatizations and the governments in which they took place:
Government Color (1990 to 1992) |
Usiminas
Celma
Cosinor
Government Itamar Franco (1992 to 1994) |
embraer
National Steel Company
Government Fernando Henrique Cardoso (1995 to 2002) |
Vale do Rio Doce (currently only Vale)
Telebras
Embratel
Banespa
Southern Bank
Government squid (2003 - 2010) |
*Concessions:
Federal highways such as BR 101
Santo Antônio Hydroelectric Power Plant
Jirau hydroelectric plant
See the difference between concession and privatization:
Concession |
Privatization |
Temporary transfer of the management of business activities from the State to the private sector, but the ownership of these companies remains with the State. |
It is the permanent or permanent transfer of public companies to the private sector, removing the role of managing or controlling them from the State. |
Dilma Government (2011 to 2016) |
Highways, such as the Rio-Niterói Bridge and BR 050 (concession)
Airports such as Guarulhos and Brasília (concession)
Temer Government (2016 to 2018) |
The Temer government also continued the concessions regime and announced in 2018 a privatization package that was approved by the Partnership and Investment Program Council. Two of the main companies that are part of this package are:
Eletrobras
Coin House
Positive and negative points
There are those who defend privatization and others who disagree with this practice. Defenders usually have liberal thinking in relation to the economy and justify privatization as an alternative to the state to pay off its debts and improve several sectors, which, in theory, would be better managed. public.
Basically, those who see privatization as something positive believe that the government is not capable of serving all sectors and managing them effectively. Many believe that sectors that have already been privatized, such as telecommunications, have significantly improved in relation to the provision of their services. Another argument is that, by privatizing, negotiations that favor certain political groups are avoided and, therefore, corruption is fought.
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Know more:Market economy
On the other hand, there are those opposed to the total or partial sale of companies or investments from the public to the private sector. Opponents of privatizations believe they are associated with institutions such as the International Monetary Fund or the World Bank, being, therefore, practices imposed by countries like the United States, which see in privatization good opportunities to increase their domination over other nations, as highlighted by the bachelor in International Relations at UFSC Bruno Blume.
Many who disagree with privatization are also against economic liberalism. For them, private companies do not have greater competence than the State to manage companies or investments. They claim that companies' transactions are not always done clearly and do not always bring the expected profit, being they could also be associated with corrupt practices, political collusion and financing of campaigns.
in short:
Strengths |
Negative points |
Companies usually start to make more profits. |
The transfer of a public asset to a private company can mean loss of assets to the population and represent only profit for the company. |
There is greater generation of wealth even if the company is part of investor groups. |
There is usually an increase in the number of outsourcers. |
There is usually a reduction in payroll expenses. |
Tendency to precarious work |
Improvement in the offer and quality of services provided by the company. |
Tendency to decrease in wage earners' income. |
Privatization of Petrobras
Petrobras is a publicly traded company belonging to the Union.
THE Petrobras it is a state-owned mixed economy, that is, it is a company that has publicly traded capital (companies in which the capital is formed by shares that are freely traded on the market), but its largest shareholder is the Government. Federal. It was considered the most profitable publicly traded company in Latin America.
The state-owned company faced several economic crises and involvement in political scandals, remaining heavily indebted for a long period. Petrobras was not privatized, therefore, it is still a state-owned company. In addition, it has partnerships with consortium companies, which invest and profit from oil exploration. The issue of privatizing this state-owned company is on the government's agenda, and many believe it may be the best option to leverage profits and enable better management.
Also know: What is Brazilian pre-salt?
Currently, the Federal Government has established three regimes for oil exploration through contracts:
Grant: guarantees exclusive rights for the production, exploration and sale of oil in a given period. |
Production sharing: the Union holds the oil and negotiates the distribution of profits among investors. |
Onerous assignment: the State gives Petrobras the right to explore oil in some areas. |
by Rafaela Sousa
Graduated in Geography
Would you like to reference this text in a school or academic work? Look:
SOUSA, Rafaela. "What is privatization?"; Brazil School. Available in: https://brasilescola.uol.com.br/o-que-e/geografia/o-que-e-privatizacao.htm. Accessed on June 27, 2021.
