August 25, 2016 / 12:32 PM / 2 years ago

Brazil state banks to fund infrastructure projects, Estado says

SAO PAULO, Aug 25 (Reuters) - State-controlled Brazilian lenders BNDES and Caixa Econômica Federal SA plan to extend funding to private investors who win licenses for port, energy and other infrastructure projects, including stakes in offshore oil finds, newspaper O Estado de S. Paulo reported on Thursday.

The planned auctions, which could be Brazil’s most ambitious privatization drive in two decades, offer more evidence of a policy shift since the Senate’s decision in May to suspend President Dilma Rousseff and try her on charges of breaking budgetary rules.

According to Estado, executives at Brasilia-based Caixa Econômica are looking at ways to use savings from workers’ severance in the so-called FI-FGTS fund to finance some of those projects. About 13.1 billion reais ($4.1 billion) could be used from FI-FGTS and another investment vehicle, the newspaper added.

Unlike prior plans, the government will not determine internal rates of return on the projects, Wellington Moreira Franco, Brazil’s secretary for infrastructure partnerships, told Estado. The plan will also include rules to discourage the formation of so-called cartels colluding to win better terms during the auctions, Estado said.

Moreira Franco’s office did not immediately answer calls. Caixa and BNDES did not have immediate comments.

Interim President Michel Temer wants to offer private investors the right to operate dozens of power, port, road, railway and airport projects to help Brazil emerge from a recession not seen since the 1930s.

Temer would be confirmed president in coming days if the Senate ousts Rousseff, a move that could come as early as this month.

Sources told Reuters in May that Temer’s officials, led by Moreira Franco, were preparing a round of investor meetings to discuss infrastructure license auctions and state asset sales during the third quarter.

$1 = 3.2247 Brazilian reais Reporting by Guillermo Parra-Bernal; Editing by Lisa Von Ahn

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