Brazil Minister Faces Uphill Fight to Fix Battered Energy Sector



Brazil Minister Faces Uphill Fight to Fix Battered Energy Sector
Interim President Michel Temer has given one of the biggest jobs of his administration to the youngest and least known of his cabinet members: Mines and Energy Minister Fernando Coelho Filho, 32.

Reuters

RIO DE JANEIRO, May 23 (Reuters) - Interim President Michel Temer has given one of the biggest jobs of his administration to the youngest and least known of his cabinet members: Mines and Energy Minister Fernando Coelho Filho, 32.

Trouble in the oil, electricity and mining industries is responsible for nearly a third of last year's 3.8 percent economic decline, deepening Brazil's worst recession since the 1930s.

Sliding crude prices and a corruption scandal have rocked state-run oil company Petrobras, which may need government help to deal with its $130 billion of debt, the largest in the world oil industry. The scandal has also hit state-run utility Electrobras, which this month had its shares delisted on the New York Stock Exchange and also may need a bailout.

Coelho, the baby-faced son of a powerful political family, was handed one of the government's biggest portfolios on May 12. Hoping to pay the debt without huge bailouts, the Temer government wants him to speed the sale of Petrobras and Eletrobras assets and open the oil sector to more foreign investment.

These moves will likely offend the deep nationalist feelings of many Brazilians, including suspended President Dilma Rousseff, who is still respected by many for expanding social programs that lifted millions from poverty.

Leftist and union groups are fighting her impeachment and impending Senate Trial. Believing the state must direct all energy development, they have also promised to fight Temer's more free-market oil, electricity and economic policies.

"The previous government ... killed the goose that lays the golden eggs," said Edmilson dos Santos, an energy policy professor at the University of Sao Paulo. "Rousseff was warned her policies would end in disaster, but she refused to listen."

Ceolho's experience in the energy sector is slim, beyond bills to cut taxes on hybrid and electric cars and to support farmers making ethanol from manioc, a staple root vegetable.

He does, though, have 10 years under his belt in Brazil's rough and tumble Congress. When elected at 22, he was then the youngest person ever seated in the lower house.

"He has more political than technical experience," said Helder Queiroz, former head of Brazil's petroleum regulator ANP. "But the ministry requires more technical knowledge. The companies he'll be dealing with demand much of a minister in a strategic job."

Coelho did not return calls seeking an interview for this story.

Experienced Assistants

Ready or not, Coelho is now in charge of promoting, regulating and in some cases running a huge portion of Brazil's economy.

The oil industry alone is responsible for 13 percent of gross domestic product. Add mining and electricity and that rises to nearly 20 percent. The electricity industry is bigger than Britain's and Italy's combined, and Petrobras operates more ships than the U.S. Navy.

"His success will depend on who is picked for the second-level jobs," José Marcio Camargo, an economics professor at Rio de Janeiro's Pontifical Catholic University and an advisor to Temer's Brazilian Democratic Movement Party.


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