July 2019, Vol. 246, No. 7
Global News
Brazil Supreme Court Approves Sale of Petrobas Pipeline Unit
Brazil’s state-run oil firm Petrobras was cleared to move forward with the sale of its TAG pipeline unit to France’s Engie SA after Brazil’s Supreme Court ruled that state-run firms do not need congressional approval to sell their subsidiaries.
Supreme Court Justice Edson Fachin, who ruled in May to suspend the $8.6 billion TAG sale, reversed his decision after the full court’s ruling, allowing Petroleo Brasileiro SA, as the firm is formally known, to go ahead with the divestment.
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. At the time Fachin suspended the sale in May, Engie had already raised $3 billion for the acquisition.
The rulings also mark a major victory for the government of President Jair Bolsonaro, which aims to kick-start Brazil’s flagging economy by raising as much as $258 billion (1 trillion reais) through the privatization of state firms. Power company Eletrobras is among those state-owned companies eyeing divestments. P&GJ
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