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By Leonardo Goy
BRASILIA, Sept 13 Brazil's new government on
Tuesday launched a sweeping plan to auction off licenses to
operate oil and gas, electricity and infrastructure projects in
an attempt to boost investment and pull the economy out of the
deepest recession in eight decades.
The government will sell operating licenses by March for
airports in the cities of Porto Alegre, Salvador, Florianópolis
and Fortaleza. It also plans to sell rights to operate federal
roads in the center-west and southern regions later next year.
President Michel Temer is selling assets and pushing for a
series of austerity steps to narrow a record budget deficit and
control debt that cost the country its investment-grade rating
and marred investor confidence in the once-booming economy. He
has vowed to shift away from the interventionist economic
policies of his predecessor, Dilma Rousseff.
"We need to open up to the private sector because the state
cannot do everything," Temer told ministers in a meeting to
discuss the plan dubbed "Project Growth."
Rousseff, a leftist in her second term as president, was
ousted by the Senate in August for breaking budget rules.
Wellington Moreira Franco, Temer's point man for boosting
private sector involvement in revamping Brazil's deteriorated
infrastructure, said the concessions will offer "realistic"
rates of return and have guaranteed long-term financing from
state banks or raised on capital markets through bond sales.
"We will restore confidence by expanding the legal security
for investors," Moreira Franco said.
The program includes the concession of already built railway
as well as the long-delayed auction of rights in oil fields and
hydroelectric dams in the first and second half of 2017.
The government hopes to raise interest in tapping Brazil's
vast offshore oil reserves in the sub-salt region with
legislation that abolishes the obligation that state-run oil
company Petrobras have a 30 percent stake in all new
The state company that manages airports, Infraero, will not
be involved in the new airport concessions, and investors who
build railways will also be allowed to operate them, unlike
previous concessions that failed to get off the ground.
The Temer administration will also privatize six power
distributors owned by state-run power holding company Eletrobras
in the north and northeastern regions next year, and
sell the Rio de Janeiro state water and sewage company Cedae in
Mining concessions that will be opened to private companies
include phosphate, copper, lead, zinc and coal deposits.
The head of Brazil's national development bank, BNDES, Maria
Silvia Bastos, said the state lender will be able to provide
15-year finance with low long-term interest rates for up to 40
percent of airport and road concessions that must have at least
a 20 percent equity stake by investors.
The BNDES can subscribe up to 50 percent of bond issues in
each project, she said.
The Temer government aims to raise $24 billion from the
concessions program, with $11 billion alone coming from the oil
and gas sector.
Temer said in a Twitter message that the infrastructure plan
will be presented to investors when he visits New York next week
to address the United Nations General Assembly.
(Writing by Alonso Soto and Anthony Boadle; Editing by Steve
Orlofsky and David Gregorio)