(New throughout, adds background, details on discussions of Eletrobras privatization)
By Tatiana Bautzer
SAO PAULO, Jan 29 (Reuters) - Brazilian President Jair Bolsonaro’s government wants to sell at least $20 billion in assets of state-owned companies this year including parts of Petrobras and Banco do Brasil, the country’s secretary of privatization said on Tuesday.
Salim Mattar said the government wants state-controlled oil company Petroleo Brasileiro SA and lenders Banco do Brasil SA and Caixa Economica Federal to sell most of their subsidiaries within four years.
Mattar, a former businessman, estimated that Brazil could raise up to 800 billion reais ($214 billion) by selling state-owned companies. The privatizations, along with cuts in spending on pensions and social security, are key to Economy Minister Paulo Guedes’s plan to reduce public debt, now equivalent to 77 percent of gross domestic product.
“If we reduce the debt, the amount of interest we save annually would allow us to increase expenditures in education and health,” Mattar said.
In his presentation, Mattar listed all Caixa’s insurance subsidiaries and Banco do Brasil’s asset manager BB DTVM as potential privatization targets.
“Why does the Brazilian state have to sell insurance products? It makes no sense,” Mattar said during a speech at an investment conference hosted by Credit Suisse Group AG in Sao Paulo.
Mattar, founder of car rental company Localiza, said Petrobras should sell most of its 36 subsidiaries, while Banco do Brasil could sell up to 16.
He added that he expects those divestitures to be far easier than privatization of state-owned companies controlled by government ministries, such as the post office or Infraero, which owns state stakes in airport operators.
The government also plans to privatize state power holding company Centrais Eletricas Brasileiras SA by selling additional shares on the market to raise capital, he said.
Preferred shares in the utility, known as Eletrobras, were up 7.3 percent in late morning trading, leading the Bovespa higher. Shares in Petrobras were up 2 percent.
Asked after his speech about recent contradictory statements related to the Eletrobras privatization, Mattar said dissent was “natural” within the government, but power generation and transmission are capital-intensive and the government does not have enough resources to capitalize the company.
The official surprised the audience by saying Bolsonaro’s government wants to shut down Brazilian development bank BNDES’s investment arm, after selling all the stakes in private companies it owns. He valued those stakes, which include shares in meatpacker JBS SA, power holding company Cemig , planemaker Embraer SA and oil company Petrobras, among others, at 110 billion reais ($29.4 billion).
Mattar said the government and Brazil’s audit court TCU have agreed to set up a department within the court specialized in privatization, to streamline the sale of government assets.
With the new structure, the government could count on a period of 120 to 150 days to sell one state-owned company, he added.
$1 = 3.7405 reais Reporting by Tatiana Bautzer Editing by David Evans, Frances Kerry and David Gregorio