UPDATE 3-Petrobras, Brazil government dodge bullet as Supreme Court approves asset salesReuters | Updated: 07-06-2019 05:52 IST | Created: 07-06-2019 05:52 IST
The decisions will allow Petrobras to proceed with its plan to divest $27 billion of non-core assets by 2023, which it has repeatedly said is key to reducing its bloated debt load. The ruling was also a positive for other state-run firms such as power company Centrais Eletricas Brasileiras SA , or Eletrobras, which is also eyeing divestments.
Plans to privatize state firms are central to Bolsonaro's economic proposals as he aims to kick-start the country's flagging economy. Paulo Guedes, the economy minister, has said the government could raise some 1 trillion reais ($258 billion) through privatizations. In a surprise ruling last month, Fachin suspended the TAG sale after a lawsuit by a union, arguing that divestments of subsidiaries by state-run firms required congressional approval. That requirement could have effectively brought such sales to a crawl.
His decision was based on a separate 2018 decision by another justice. The case raised questions about the clarity of Brazil's judicial framework. Brazil's slightly lower Supreme Judicial Court and the nation's solicitor general had approved the sale before the May ruling. Brazil's antitrust regulator had signed off on the deal as well.
By the time the deal was suspended, Engie had already raised $3 billion for the acquisition. ($1 = 3.88 reais) (Reporting by Ricardo Brito; Writing by Gram Slattery; Editing by James Dalgleish and Peter Cooney)