Brazil’s state-run oil company Petrobras has been given the green light to sell its subsidiaries, a victory for Brazil’s government, in what is regarded as a massive win for both the firm, and the ruling party alike according to AFP.
They have reached $8.6 bn deal to sell Petrobras’s TAG pipeline network, following a ruling by the country’s Supreme Court.
According to the law, the privatization of any government owned company must be approved by a parliamentary vote, according to the court ruling issued on Thursday, June 6th, however it was decided that the clause does not include subsidiaries of such companies.
Previously, the Supreme Court had rejected an attempt by oil industry unions to appeal against the sale of TAG.
New privatization projects have been introduced by Brazil’s new president, Jair Bolsonaro, and economy minister Paulo Guedes, in order to reduce public debt since they took power. And plans to privatize state firms are part of Bolsonaro’s economic proposals to revive Brazil’s ailing economy. Guedes said the government could raise some one trillion reals ($258 billion) through privatization.
Currently, Brazil owns 134 state firms, which include 88 classified as subsidiaries. Petrobras has 36 subsidiaries, Electrobras with 30, and Banco de Brazil has 16.
Petrobras has been entangled in a sprawling corruption scandal over the last few years, and has been hit by the world fall in oil prices.