Brazil Audit Court approves Eletrobras capitalization as proposed by the government
RIO DE JANEIRO, BRAZIL – The Federal Audit Court (TCU) approved by majority the first stage of Eletrobras’ privatization, as desired by the government. The government’s aim is to complete the privatization operation by May this year.
Justice Aroldo Cedraz, the rapporteur of the case, was joined in his vote by 5 other Justices. Although the court comprises 9 justices, only 7 were able to vote in the case.
The electric giant’s shares were one of Ibovespa’s highlights of the day: common shares (ELET3) closed up 6.22%, and preferred shares B (ELET6), up 6.54%.
In total, the government has estimated the amounts related to the privatization of Eletrobras at R$67 (US$13) billion. Of this amount, R$25.3 billion will be paid by Eletrobras to the National Treasury for the concessions of hydroelectric plants whose contracts will be amended. Another R$32 billion will be used to relieve the electricity bills from next year on, through funds from the electric sector, the Energy Development Account (CDE).
Another R$2.9 billion will be allocated to finance the purchase of fuel for energy generation in Brazil’s Northern region, where several cities are not connected to the national energy system. The remainder will be used to revitalize the watersheds of the São Francisco River, the Minas Gerais and Goiás rivers, and to generate energy in the Amazon.
Despite the government’s success with the approval of the first part of Eletrobras’ privatization, a second stage of the operation will be examined by the Audit Court. The final stage concerns the capitalization model and format. Nevertheless, the government will be in a position to advance the operation with the award part, approved by the TCU.
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