Privatization of state-owned companies in Minas Gerais

Image: Ferran Perez


The history of privatizations in Brazil exposes countless cases of companies sold at degrading prices, whose services declined sharply after the transition to the private sector

The privatization process of state-owned companies in Minas Gerais, under the stunning leadership of Governor Romeu Zema, raises a series of debates and controversies of a complex and, certainly, multifaceted nature. The privatization proposal, which covers highly relevant entities such as the Minas Gerais Sanitation Company (Copasa), the Minas Gerais Energy Company (Cemig) and the Minas Gerais Gas Company (Gasmig), not only raises questions of a economic, but also deeply questions democratic principles and the legitimacy of the decision-making process in a pluralistic society.

A primary criticism of the position of Romeu Zema's government lies in the apparent absence of substantive dialogue and the aversion to democratic exercise. The governor has publicly expressed his intention to remove from Minas Gerais' Magna Carta the obligation to hold popular referendums for privatizations in the form of Constitutional Amendment Proposal No. 24/2023, arguing that such consultations are unfeasible in operational terms.

Such an authoritarian stance and disregard for the imperative of democratic discussion emerges as a disturbing aspect, particularly when considering that opinion polls indicate an unequivocal resistance from the population of Minas Gerais to the privatization of the aforementioned state-owned companies, according to a survey carried out by DataTempo in August 2022.

The survey reveals a clear trend of opposition to the privatization of state-owned companies in Minas Gerais by the majority of voters, reflecting a position of valuing the role of the State in the management of essential services such as electricity, basic sanitation and distribution of natural gas. Specifically, Cemig emerges as the company that has the most resistance to privatization, with 65,3% of those interviewed speaking out against this possibility, followed by Copasa, with 59,6%, and Gasmig, with 53,9%. The relevance of these opinions stands out given the strategic importance of these companies in everyday life and the socioeconomic development of the state.

The government justification for privatization is based on the supposed need to increase the efficiency and management of companies, as well as attracting private investments aimed at catalyzing state economic development. However, such arguments, despite being superficially persuasive, disregard a range of complex and substantial factors. Firstly, it should be noted that the state-owned companies under scrutiny have demonstrated considerable profitability, which raises questions regarding the urgency and relevance of privatization as a panacea for the state's financial woes. Furthermore, the history of privatizations in Brazil exposes countless cases of companies sold at degrading prices, whose services declined sharply after the transition to the private sector, harming the community and compromising social well-being.

Another pressing dispute refers to the social impact of privatization, especially for state-owned workers and the communities that depend on the services they offer. Privatization can result in large-scale unemployment, precarious labor relations and increased tariffs for consumers, worsening social and economic disparities within society. Furthermore, the lack of transparency and popular participation in the privatization process can undermine public trust in democratic institutions and allow for discretionary and unethical actions by the government.

Therefore, it is essential that Minas Gerais society mobilizes and exerts pressure on governmental and legislative bodies, in order to ensure that the process of analysis and discussion of privatization of state-owned companies is conducted in a transparent, democratic and responsible manner. The active participation of the population is essential to safeguard collective interests and ensure that political decisions are in tune with the needs and desires of the people of Minas Gerais.

The preservation of public heritage and democratic foundations is the responsibility of all citizens and a fundamental element in the construction of a more just, equitable and democratic society.

*Pedro Henrique Maurício Aniceto He is majoring in economic sciences at the Federal University of Juiz de Fora (UFJF).

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