A crucial day for privatizations in Brazil
The Brazilian Supreme Court will analyze two cases on whether or not the government needs congressional approval to carry out privatizations. The 11 justices will rule on whether to uphold last year’s injunction by Justice Ricardo Lewandowski, which limited the government’s powers—due to a risk of “irreparable damage to the country.” The ruling establishes that for each privatization process, there must be a specific law approved by lawmakers—an understanding that would clog up the government’s divestments plan.
Whichever way the court leans, the vote is predicted to be tight. Justices will also decide if state companies must hold traditional bidding processes (in which all bidders are submitted to the same conditions) to sell off subsidiaries, or if they can engage in deals directly with suitors. Earlier this week, Justice Edson Fachin suspended a USD 8.6bn deal selling a Petrobras pipeline administrator to an international consortium.
The ruling can block—or clear—USD 32.3bn in privatizations intended by Petrobras. These deals have been considered the cornerstone of the oil and gas company’s recovery from a deep crisis, caused by poor administration and corruption scandals. Trying to convince justices to vote...