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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Nicomedes Neto | May. 25, 2016
I'm Brazilian, graduated at UFRJ. What people abroad should understand is that an old problem from Brazil is lack of interest from government to invest in good education and develop the national technology, which would be in part a consequence of the first. Most of presidents, like Rousseff, prefer to keep the biggest part of the nation ignorant, so they can have a better control of them. When they pay a monthly assistance for so many poor people, instead of investing on their sustainable development ... they're not lifting millions from poverty like said on this article, they're crating social parasites. The fundamental solution for Brazil is having educated, good level hand force, people who can vote correctly and demand for responsible actions from their government. I'm also in favor that the control of Brazilian reserves belong to national interest. That way the country isn't exploited like a colony, the way it has been, since it has been selling its raw materials for low cost instead of industrialized goods with higher aggregated cost. I tried my best to revert this scenario, at least in my area, within 9 years of research at the Federal University of Rio de Janeiro, publishing directories, books, articles to provide the Chemical Industry the technology and information they would need to develop nationally products with high aggregated value and importation volume. During the 12 years at UFRJ, I noticed that the research isn't well recognized, you have no future, you're just an idealist trying to plant good ideas which are not going anywhere. Countries in Asia had the opposite approach to develop their economy: the education, research, national technology was fomented and they achieved good results I hope the media could collaborate to make clear to everybody what’s the real “trigger” to change Brazilian situation.


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