To understand how government-owned utilities were developed and how they will change.
In the 70's the government implemented self funding utilities:
I would buy a telephone line and would pay for a fund that would finance the expansion of the system.
I would pay with my electrity charge a fee that would put into a fund to finance the expansion of the system.
I also paid a fee on my vehicle license that would finance the expansion of the roads' system.
This went well until it did not. Why it did not?
Brazil hit a brick wall during the 70's. As oil shock hit, Brazil needed to borrow money to import oil. Once it built a sizeable amount of debt, Paul Volcker to end inflation jacked up interest rates to double digits.
Brazil collpased in August 1982. A Lost Decade (in fact 14 years) ensued.
What does have to do with the funds above (road, telcos and electrical) utilities?
The funds were raided, during the Lost decade, to keep the system functioning during the time Brazil did not have access to capital to finance the expansion or even the bare functioning of the system.
After 1994, hyper infation ended. Country became stable. Paid its debt and presently has access to capital.
All those laws and rules of the past have no longer any meaning. Thus, government have to restart on a new foot.
Today you drive on a road built by the government, cared and maintained by a private company, that won a concession, and you pay toll on them. We are doing now the same with airports too.
You can see the government modernizing the rules to deal away with the old laws implemented in the 70s and people look at it as if the government is trying to implement laws and regulations with goal to take more control.
One must know that only now the government is dealing with the state owned legacy economy built by the military government of the 70s.
Obvioulsy also delaing with the entrenched interest of those -Brazilians, not foreigners- for whom a change is going to hurt them in their pockets. |
