Sale of the post office may raise R $ 15 billion in 2021, says Fabio Faria

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Post Office Cars (credit: Fernando Frazão / Agência Brasil)

(Bloomberg) – The project that paves the way for the privatization of the Post Office is being finalized at the Ministry of Communications and will be sent to Congress by the end of the year, said Communications Minister Fabio Faria, in an interview in his office.

According to him, the sale of Brazilian postal services has the potential to attract more than ten companies and could bring about R $ 15 billion to public coffers.

Despite not moving as fast as expected by the Minister of Economy, Paulo Guedes, the BNDES is already working on modeling privatization, after selecting last month the consortium responsible for technical studies. A new program of layoffs encouraged to reduce costs is also being considered to make the state company more attractive to the private sector.

“We could do a PEC or a bill, we opted for the bill that must be finalized at the Ministry of Communications in the next 15 days and sent to the Planalto Palace for adjustments. By the end of the year, the Executive will have done and delivered his homework and the project will be in Congress to be improved by deputies and senators ”, he said.

Still informally, said the minister, some of the largest companies in the private sector are looking at privatization.

“At least five large companies have shown government officials some interest. It is obvious that FedEx and DHL will look at this privatization, as will Magazine Luiza and Amazon. ”

The minister’s expectation is that the e-commerce giant Mercado Livre will also enter this dispute. The Post Office is responsible for delivering more than 50% of what Mercado Livre sells and the company has faced difficulties in recent weeks because of the strike by employees. “Nobody spoke to me, but I think they will think about it,” said Faria.

The companies cited did not immediately respond to requests for comment when contacted by Bloomberg News. The price suggested by Faria for privatization was seen as very optimistic by two former government employees familiar with the company’s financial situation, which includes labor liabilities, pension fund problems and a high number of employees.

In the midst of the pandemic, postal workers went on strike, which made it difficult to deliver parcels and correspondence. After more than 30 days, the Superior Labor Court determined that employees return to work under the penalty of a daily fine of R $ 100,000.

Whoever takes control of the state company will have the burden and the bonus, according to the minister. The buyer will have access to a large market, but it will be necessary to offer postal services in remote locations in the country. “The key is that the service is universal. The Post Office reaches 95% of the locations and this has to be maintained, even if the buyer outsources the service in some regions. ”

The Correios recorded losses in series and started to make a profit as of 2017.

5G Auction

The 5G auction in Brazil, which would initially take place this year and had a first postponement to February 2021, is now scheduled to take place between April and May next year. The coronavirus crisis delayed the process, but Faria said that this will be an advantage for Brazil because the government will be able to observe what is happening in the rest of the world on the matter.

He declined to comment on how the government will treat China’s participation in the dispute. “I am not going to address the geopolitical issue. This is a decision by President Jair Bolsonaro and Chancellor Ernesto Araújo. ”

Earlier this week, Bolsonaro said in an opening speech at the 75th United Nations General Assembly that Brazil will only negotiate technologies with partners that respect Brazil’s sovereignty and cherish freedom and data protection.

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