Felipe Montoro Jens on the Development Privatization Process in Brazil

Background Information

Felipe Montoro Jens works as the Chief Executive Officer of Energipar Captação S.A. and the Chairman of Concessionária do Centro Administrativo do Distrito Federal S.A. He also served as a Director of Braskem S.A., Concesionaria Trasvase Olmos S.A and Santo Antônio Energia S.A.

He attended Getulio Vargas Foundation where he received his undergraduate degree. He later went to the Thunderbird School of Global Management and received a graduate degree.

The History of the Privatization Process

Brazil is seen as a strong state which heightened in the 20th century. The privatization process in Brazil was as a result of external debt catastrophe. For Brazil to develop its infrastructure sector, it needed the private sector to participate, and this led to privatization process that that would allow Brazil meet the demand for investments necessary for infrastructure.

In April 1990, the government included privatization as part of the economic reforms when they established the National Privatization Program. Due to this, petrochemical companies and others like steel and aeronautical sectors were also privatized. The government gave primacy to privatizations in the transportation sector, electric, sanitation, sale of state banks and telecommunications. The Public Private Partnerships Act (PPPs) was approved in 2004.

Telecommunication sector was the first to be managed by private agents. The specialist in Infrastructure Projects, Felipe Montoro Jens, states that the General Telecommunications Law established in 1997 instructs the government is responsible for only regulation but not for the provision of services in the sector.

An independent agency, the National Telecommunications Agency (ANATEL), was created to oversee the regulation of the sector. A competitive environment resulted when ANATEL was given the role of determining the tariffs which were previously done by the Ministry of Communications.

Mr. Montoro explains that to prevent the return to monopoly, the government improved the productivity of Telebras by dividing it into 12 holding companies with each participant allowed to buy only one holding. This auction is what successfully changed the telecommunication sector.

The consolidation of a governing agency before opening to private capital was what led to the success of the privatization process since it created standards that the new companies followed creating efficiency and competition.


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