RIO DE JANEIRO, BRAZIL – Equatorial Energia is a strong candidate, alongside Oliveira Energia, to bid for state-owned Amapá electricity distribution company in a privatization auction scheduled for June 25, Bank of America said in a report to clients on Wednesday, June 16.
The Electricity Company of Amapá (CEA) has a regulatory asset base of R$434 (US$85.8) million considering the year 2021, and serves a population of 880,000.
“The opportunity: the virtually zero minimum price (R$50,000) reflects operations that drain cash (approximately R$100 million negative EBITDA a year) and liabilities (R$3.9 billion a year). However, we see room for decent returns (real Internal Rate of Return of 14%) in a scenario of operational recovery,” point out the analysts.
They say CEA would be a good option for Equatorial because the company has a good track record in performing operational turnarounds in companies, which could be expedited given synergies with neighboring concessions. Moreover, operating in Amapá could be a competitive advantage in future growth opportunities.
Amapá has suffered from a series of power supply outages. On Wednesday, the state experienced its 5th blackout this year alone, the National Electric System Operator (ONS) said in a statement.