(Recasts with estimate of value, details on road show, comments, background, changes dateline)
By Silvio Cascione
BRASILIA/SAO PAULO, Sept 12 (Reuters) - Brazil expects to raise nearly 2 billion reais ($641.58 million) in 2018 with the concession of an instant lottery unit, a government source told Reuters on Tuesday, after the government tapped state development bank BNDES to organize the auction.
The forecast represents approximately twice the value of the minimum bid of 922 million reais. The funds, however, would not come in time to help policymakers meet their 2017 budget target for a deficit of 159 billion reais.
According to the Tuesday edition of the government gazette, BNDES will be tasked with preparing all financial and legal aspects of an auction of instant lottery unit Loteria Instantânea Exclusiva Lotex.
The auction, scheduled for December according to Finance Ministry secretary Mansueto Almeida, is part of President Michel Temer's efforts to reduce state involvement in the economy and cut a widening budget gap.
Almeida said the main goal of the concession is to open the instant lottery market to private investors, not simply to raise cash. "If the proceeds come in 2017, great. But those resources are not in this year's budget," Almeida wrote on Twitter.
Legal hurdles to some austerity measures and Congress opposition to tax hikes have put the budget targets at risk even after they were loosened last month.
The government has struggled to strike a deal with lawmakers to raise as much as 13 billion reais through a tax renegotiation program known as Refis.
It has also faced a legal battle to organize an auction for the licensing rights of several hydropower dams later this month, in which it expects to raise about 11 billion reais.
The government has been considering for at least a couple of years offering Lotex for private investors, but Temer made the plan official last month.
The government will organize road shows in New York and Las Vegas in coming weeks to offer Lotex to foreign investors, added the government source, who requested anonymity to speak freely about details of the concession.
A government council focused on state asset sales approved on Aug. 23 a plan to divest stakes in some of the country's busiest airports as well as oil exploration, highway and power dam licensing rights.
The government estimates buyers of licensing rights would be required to invest about 44 billion reais ($14.1 billion) to win and operate the assets.
$1 = 3.1185 reais Additional reporting by Guillermo Parra-Bernal and Gabriela Mello in Sao Paulo; Editing by Bill Trott and Frances Kerry