Portugal’s President vetoes the Government’s decree to privatise TAP citing ‘multiple doubts and reticence’

THE President of Portugal vetoed the government’s decree outlining the conditions for the reprivatisation of TAP this Friday, October 27.

Marcelo Rebelo de Sousa reportedly asked for clarification on the intervention of the State, the sale or acquisition of assets and the transparency of the operation, according to zap.aeiou.pt.

His veto was released in a statement published on the official website of the Presidency of the Republic, which stated that De Sousa: ‘Decided to return the decree of privatisation of TAP to the Government, requesting clarification of three aspects that he considered essential’.

Why did he veto the decree?

The head of state asked the Government to clarify: ‘The capacity for monitoring and intervention of the State in a strategic company such as TAP; the issue of the disposal or acquisition of assets even before privatisation; and the transparency of the entire operation’, said the statement.

De Sousa disputed the fact that the decree-law was silent on the role of the state in administrative decisions. He emphasised the importance of the ‘future effective capacity of the State to monitor and intervene in a strategic company such as TAP’.

He also pointed out that: ‘if the sale of any percentage above 51 per cent” of the company was allowed, the decree-law ‘does not expressly foresee or allow any role for the State in subsequent administrative decisions’.

Secondly, the President questioned the fact that: ‘The decree-law allows TAP to sell or acquire, even before the decision to sell, any type of asset, without the slightest precision or criteria, which goes far beyond the planned integration of Portugália into TAP SA’.

There was a lack of ‘total transparency’ in the decree

Thirdly, the head of state criticised the decree-law for: ‘not ensuring total transparency, in a phase of contacts prior to the drawing up of the specifications, in other words, of the rules that will guide the choice of a possible buyer, at the very least making it clear that these will not be binding negotiations and that there will be a record of these contacts’.

In his opinion, this was: ‘Fundamental to ensure proof of the full exemption of the procedures, if the issue of the aforementioned transparency of the process and the choice of the buyer is raised at a later stage’.

According to De Sousa, the decree raised: ‘multiple doubts and misgivings in the light of the desired maximum transparency of the process’.

‘I believe that maximum transparency must be ensured throughout the process that will lead to a decision to sell control of the company’, he emphasised.

The Government previously stated it would sell at least 51 per cent of TAP

It should be remembered that the government previously announced its intention to sell at least 51 per cent of TAP’s capital, reserving up to five per cent for the workers.

‘This is the minimum percentage’ of the sale, stressed Finance Minister Fernando Medina, who had already stated in the past that the privatisation would maintain the Lisbon hub and the company’s autonomy.

The Portuguese Government is seeking a ‘scale investor’ in the air sector in the context of TAP’s reprivatisation, after it returned to the state sphere during the pandemic. Earlier this week, the airline announced record profits in the first nine months of 2023.

He also said that the Government wanted to approve the specifications of the privatisation of the company in the Council of Ministers by the end of the year, or ‘at the latest’, by at the beginning of 2024.