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Government likely to restrict the share of private investors in Eletrobras [free access]

September 5, 2017

Reportedly, Brazil is planning to put a cap on the share of investment a private player could have in the country’s largest state-owned electricity company Centrais Eletricas Brasileiras SA (Eletrobras) at 2 per cent to 5 per cent, regardless of whether they are domestic or foreign investors.

 

Last month, the Brazil government proposed a plan to put up 57 major state infrastructure assets for privatisation, including selling some or all of its 51 per cent stake in Eletrobras. The government expects to get about USD6.4 billion from the sale of its stake. The Eletrobras owns and controls almost one third of Brazil’s power-generating capacity and high-voltage transmission network.

 

In August 2017, the Conselho do Programa de Parcerias de Investimentos (CPPI) da Presidência da República or Council of the Program of Investment Partnerships of the Presidency of the Republic, approved Brazil’s Ministry of Mines and Energy’s (MME) proposal to privatise Eletrobras. This is likely to improve the financial health of the latter.

 

As per Eletrobras, the privatisation process of the company depends on other governmental authorisations, evaluation by legal/regulatory authorities of the model to be adopted for the same, contractual obligations assumed by the company, and compliance with specific procedures.

 

Various players are showing interest in buying stakes in Eletrobras, including State Grid Corporation of China (SGCC).