Lula shows interest in taking over Minas Gerais-owned companies

Brazil’s President Luiz Inácio Lula da Silva signaled interest in accepting federal control over firms owned by Minas Gerais under a mechanism that would help the state to reduce its debt with the national government and prevent privatizations.

Lula recently promulgated a law that determines how states pay their debts, even allowing them to transfer companies and reduce their federal obligations.

Minas Gerais could use this mechanism and transfer water utility Copasa, energy company Cemig and Codemig, which has a niobium production partnership with CBMM. 

"Obviously, we are interested in these companies, but I’m not going to take over these companies to privatize them. If it's to privatize, let Minas Gerais sell the company and then use the proceeds to pay the federal government," Lula told radio broadcasters in Minas Gerais.

The state owes 165bn reais (US$28.5bn), while its stakes in these companies add up to 80bn reais, according to local media.

Right-wing governor Romeu Zema and leftist Lula have a tense relationship, with the former favoring privatizations and the latter a bigger role for the State in the economy.