Can the government privatize Petrobras following the same model as Eletrobras?
The government once again considered the privatization of Petrobras through a model similar to the one used to privatize Eletrobras, that is, with a capitalization (sale of shares on the stock exchange). This time, the possibility was mentioned by the Minister of Economy, Paulo Guedes. If, in the case of the electric company, the government’s participation in the voting capital had to fall from 68.6% to less than 50%, in the oil company, the block of state control is smaller, of only 50.26% of the ON shares (common, which give the right to vote on company decisions).
This is one of the reasons that make it possible to privatize Petrobras through capitalization, say experts heard by UOL. According to them, there are interested investors and other examples in the world. But unlike Eletrobras, which was privatized when most of the energy sector was already private, Petrobras still dominates 75% of fuel refining and 93% of oil exploration. There is greater political resistance to the privatization of the company.
Steps already taken in the privatization of Petrobras
On May 30, the Ministry of Mines and Energy formalized to the Ministry of Economy the request for Petrobras to be included in the Investment Partnership Program (PPI) portfolio, which was approved on June 2. The process is with the technical team of the Ministry of Economy, responsible for studies to define a model for privatization of Petrobras.
First, Eletrobras was a vertical monopoly, it sold the distribution chain, then the transmission chains. And now we finally privatized the company. Petrobras is the same. Sold the distribution chain. In the end, it is limited to the core business [parte principal do negócio], which is oil exploration. Then we can also privatize and increase competition.
Asset sales have already started
As Guedes stated, Petrobras has already sold BRL 243.7 billion in assets after 68 transactions in seven years, since 2015, in businesses such as fuel distributor BR, gas hubs, pipelines and oil exploration fields.
According to the oil company, this plan will generate resources to pay debts and reinforce investments in the area that is now considered by the administration to be the most important in the group: the exploration of oil in the pre-salt layer.
And it is precisely this part that the current government now wants to transfer definitively to the private sector.
Model that can inspire privatization of Petrobras
To privatize Eletrobras, the government did not put the company up for sale in an auction, as happened, for example, with CSN, or Vale. The model used in the electric company was that of an offering of new common shares that give the right to vote. With the increase in the base of these shares, the government, which had 68.6% of the voting shares, was left with 40.3%.
Also before the offer, the government had to pass a law in Congress with new rules for the electricity sector and for Eletrobras itself, such as the golden share, a special action that gives the government the power to veto, for example, the takeover by another company, or the rule that limits the total votes of each shareholder to 10%, even if he has more than 10% of the ON shares.
For the managing partner and founder of Cbie (Brazilian Center for Infrastructure), Adriano Pires, who was appointed by the current government to assume the presidency of Petrobras, the privatization model used at Eletrobras can be replicated. According to him, this model creates a corporation, a type of company that already works in other oil companies, such as Shell.
Making the process with rules similar to those used in Eletrobras, with golden share and limit of votes to shareholders so that the company is not taken by a single controller, we can have a privatization of Petrobras.
What would it take to privatize Petrobras?
Unlike Eletrobras, whose government share in the voting capital was 68.6%, in Petrobras, the state-controlled block holds only 50.26% of ON shares. In terms of number of shares, the government controls 3.74 billion ON shares, while other investors own 3.701 billion ON shares.
If the government makes an offer of just 39 million new Petrobras ON shares, that would be enough for the Brazilian state to no longer have more than 50% of the voting shares in the oil company.
Considering the closing price of the share last Tuesday (14), of BRL 32.70, an offer of around BRL 1.3 billion would only be enough for the government to lose more than half of the controlling block. of the company.
Much less than the lot of 628 million ON shares that the government sold to reduce the stake in Eletrobras below 50%, in a deal that generated BRL 29 billion in the base offer, not counting the extra lots.
It’s a viable model. There would be interest from investors in the process. The main advantage would be to eliminate the biggest risk that the operation carries today, which is state control.
João Daronco, analyst at Suno Research
Offer would be higher
Market analysts say that the basic offer for the government to privatize Petrobras would tend to go far beyond these minimum numbers above for at least two reasons.
Petrobras already has a large predominance of private investors in the total capital and, in the part of common shares, the government has something around 50.3%. It is different from the Eletrobras composition, in which the government had almost 70%. But if it is something similar to the Eletrobras model, the operation should be much larger.
Matheus Spiess, analyst at the Empiricus analysis house
Valor de cada ação: Só o anúncio do processo de privatização da Petrobras já atrairia investidores interessados nas ações da empresa. Assim, a ação ON se valorizaria antes mesmo da oferta. Lote maior de oferta: Uma oferta de capitalização para privatizar a Petrobras seria aproveitada também para atrair mais recursos para a companhia.
Despite the expectation of an energy transition with an increase in the share of renewable energy sources, it is likely that oil will still be the main source of energy available in the next 30 years. Petrobras, because of the pre-salt layer, is a very interesting option for global investors, large western oil companies with difficulty in advancing in geopolitically troubled areas and large sovereign wealth funds in oil-exporting countries.
Luiz Fernando Araújo, CEO of Finacap Investimentos
Advantages of privatization
Supporters of Petrobras’ privatization say the process would generate competition, attract more investment in oil, gas and fuels and even strengthen the public bodies responsible for the rules and supervision of these markets.
They point out that, even with privatization, the Brazilian State would continue to be the largest individual shareholder, thus maintaining a good share in the distribution of the oil company’s profits.
Of the R$ 48.5 billion that will be distributed by the company as dividends for the first quarter of the year, for example, the Union was left with around R$ 14 billion.
Petrobras will no longer be used as an electoral instrument, it will be able to invest more efficiently than today and thus allow the country to generate more wealth. For the sector, the important thing is to have a government that is a good supervisor and regulator. And with Petrobras privatized, regulatory bodies will have greater independence to act.
Disadvantages of privatization
Critics of Petrobras’ privatization say this model will reduce the country’s strategic planning capacity in the energy, oil, gas, petrochemical and fuel sectors. In addition, the operation may worsen market concentration in refining, supply infrastructure and the gas distribution network.
In the oil industry, the production and refining stages are distinct but complementary. By concentrating its operations only in the exploration area, the company loses protection against variations in relative prices in refining or in exploration and production.
Ildo Sauer, professor at the Institute of Energy and Environment at the University of São Paulo (IE-USP)
By privatizing the largest company in the sector, we will always have to be hostage to private incentives and tax exemptions when we have problems with fuel prices. And that’s exactly what we’re experiencing right now.
Eric Gil Dantas, economist at the Social Observatory of Petroleum (OSP) and the Brazilian Institute of Political and Social Studies (Ibeps)