This content is from: Local Insights

Brazil

Privatization of telecommunications

Decree 2,338 of October 7 1997, published in the official gazette on October 8 1997, implements Law 9,472 of July 16 1997, which created a regulatory agency for the telecoms sector, the National Agency of Telecommunications (ANATEL) and paved the way for the privatization of the operating subsidiaries of the state-owned utility Telebrás.

As recently confirmed by minister Sérgio Motta, the government has decided to privatize the entire Telebrás system by the middle of next year. Subsidiaries to be privatized include those that will retain the existing concessions in relation to band A mobile phone services. The privatization model to be employed is expected to be announced soon.

In spite of the accumulated problems stemming from many years of inadequate investment, the 28 companies making up the Telebrás system now constitute one of the 20 largest operators in the world, and the largest in the southern hemisphere. Telebrás has more than 94% of the telephone exchanges, and more than 91% of all of the local phone lines in Brazil. The substructure of the interstate and international system for transmission with Telebrás consists of three domestic Brazilian satellites, five Instelsat satellites and one Inmarsat satellite.


Oil sector privatization

Law 9,478 of August 6 1997, published in the official gazette on August 7 1997, has repealed law 2,004 of October 3 1953, ending the state-controlled company Petrobrás's 44-year monopoly of the oil sector. The enactment of Law 9478/97 was only made possible after the Ninth Amendment to the Constitution was passed on November 9 1995 allowing the state to hire private sector companies for the drilling, refining, international marketing and transportation of oil, oil-based derivatives and natural gas.

The National Petroleum Agency (ANP) was created by Law 9478/97 as the sector regulator. Petrobrás is to transfer to ANP the information at present available on Brazilian sedimentary basins and the activities carried out by the recently defunct monopoly. Petrobrás will be granted temporary concessions in those areas already exploited. Concessions in the remaining areas will be privatized in accordance with Law 9478/97 and further regulation is expected to be issued shortly by ANP.

The previous prohibition on foreign participation in Petrobrás has been removed and the government has been allowed to sell its shares in Petrobrás provided it retains voting control.

Eliana Maria Filippozzi

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