Petrobras, Why Privatization Alone Can Never Kill Corruption

Petrobras, Why Privatization Alone Can Never Kill Corruption
Hélio Schartsman


SÃO PAULO — The ongoing corruption and money laundering scandals at Brazil's state-owned oil company Petrobras have badly tarnished the image of the company. Once considered as a sort of national treasure, the public firm faces almost daily revelations about kickbacks paid to politicians from oil sales as part of a scheme to buy votes, which has led to a growing chorus calling for Petrobras to be privatized.

But that reasoning is flawed. If being in private hands was any guarantee against corruption, then there wouldn't be so many directors and managers who have wound up behind bars. That doesn't mean, though, that privatization doesn"t offer a cure to many of the ills that are causing devastating damage to state-owned companies.

Australian philosopher Peter Singer identified the issue well in a 1999 book in which he defended the left's adoption of Social Darwinism instead of fighting against it. On paper — that is, in abstract terms and without taking human nature into consideration — the best way to provide goods and services to the population would be via state monopoly. It offers many advantages without requiring that benefits be redistributed among shareholders.

But reality doesn't exist on paper, and "state monopoly" is often mocked as synonymous with "inefficiency." That's because it is human nature to work better and harder when we do so for selfish reasons — in other words, to earn money and prestige.

If those responsible for the day-to-day business of a company don't benefit one way or another from its success, the end result is a clear break between the interests of the organization and that of its workers. In the best-case scenario, that leads to inefficiencies, and in the worst case, to systematic corruption.

The bottom line is not necessarily that Petrobras must be privatized. But there's no doubt that the oil giant needs to adopt some habits that are commonplace in private companies. For instance, its directors should be chosen for their competence and experience, not for political motivations.

According to Singer, one of the left's big mistakes has been to believe that there's no fixed human nature. But our nature is a hybrid one. We can work hand in hand, but it's inevitable that we take advantage of a situation when the conditions allow and the opportunity presents itself.

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In Argentina, A Visit To World's Highest Solar Energy Park

With loans and solar panels from China, the massive solar park has been opened a year and is already powering the surrounding areas. Now the Chinese supplier is pushing for an expansion.

960,000 solar panels have been installed at the Cauchari park

Silvia Naishtat

CAUCHARI — Driving across the border with Chile into the northwest Argentine department of Susques, you may spot what looks like a black mass in the distance. Arriving at a 4,000-meter altitude in the municipality of Cauchari, what comes into view instead is an assembly of 960,000 solar panels. It is the world's highest photovoltaic (PV) park, which is also the second biggest solar energy facility in Latin America, after Mexico's Aguascalientes plant.

Spread over 800 hectares in an arid landscape, the Cauchari park has been operating for a year, and has so far turned sunshine into 315 megawatts of electricity, enough to power the local provincial capital of Jujuy through the national grid.

It has also generated some $50 million for the province, which Governor Gerardo Morales has allocated to building 239 schools.

Abundant sunshine, low temperatures

The physicist Martín Albornoz says Cauchari, which means "link to the sun," is exposed to the best solar radiation anywhere. The area has 260 days of sunshine, with no smog and relatively low temperatures, which helps keep the panels in optimal conditions.

Its construction began with a loan of more than $331 million from China's Eximbank, which allowed the purchase of panels made in Shanghai. They arrived in Buenos Aires in 2,500 containers and were later trucked a considerable distance to the site in Cauchari . This was a titanic project that required 1,200 builders and 10-ton cranes, but will save some 780,000 tons of CO2 emissions a year.

It is now run by 60 technicians. Its panels, with a 25-year guarantee, follow the sun's path and are cleaned twice a year. The plant is expected to have a service life of 40 years. Its choice of location was based on power lines traced in the 1990s to export power to Chile, now fed by the park.

Chinese engineers working in an office at the Cauchari park


Chinese want to expand

The plant belongs to the public-sector firm Jemse (Jujuy Energía y Minería), created in 2011 by the province's then governor Eduardo Fellner. Jemse's president, Felipe Albornoz, says that once Chinese credits are repaid in 20 years, Cauchari will earn the province $600 million.

The Argentine Energy ministry must now decide on the park's proposed expansion. The Chinese would pay in $200 million, which will help install 400,000 additional panels and generate enough power for the entire province of Jujuy.

The park's CEO, Guillermo Hoerth, observes that state policies are key to turning Jujuy into a green province. "We must change the production model. The world is rapidly cutting fossil fuel emissions. This is a great opportunity," Hoerth says.

The province's energy chief, Mario Pizarro, says in turn that Susques and three other provincial districts are already self-sufficient with clean energy, and three other districts would soon follow.

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