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Brazilian government to privatize Eletrobras with sale of controlling stake

EBR Staff Writer Published 25 August 2017

The Brazilian government has proposed to privatize Eletrobras by divesting its controlling stake in a move to increase efficiency and make the state-owned utility more competitive and modernized.

As of now, the government is the majority shareholder in Eletrobras with a stake of 51%.

It plans to propose to the council of the Investment Partnership Program (PPI) for the privatization of the company, which is responsible for a significant percentage of electricity generation in Brazil.

The sale of its stake by the Brazilian government is an attempt to improve competitiveness, attract more investment and boost the finances of the company.

In a press conference, Brazil Mines and Energy Minister Fernando Bezerra Coelho Filho said: “We are delivering a new company to the infrastructure sector and to the Brazilian electric power system. A much more agile and modern company, with the capacity to face the challenges of an even more competitive scenario of globalised companies and corporations.”

The government expects to raise BRL20bn ($6.3bn) by offloading its stake in the country's biggest power utility,eNCA reported.

The Minister expects the privatization of Eletrobras to be completed by the end of the first half of 2018.

Filho said: "We understand that, without the ties of a public company, Eletrobras will be much more efficient and agile."

Through the privatization and subsequent stake reduction, the Brazilian government says that it will continue to hold the right to receive dividends and profits. However, it will have curtailed voting power with its participation expected to be pertained to only making some strategic decisions.

As per the government, nuclear company Eletronuclear, a wholly-owned subsidiary of Eletrobras and the 14GW Itaipu hydroelectric plant will be treated separately in the privatization.

According to Filho, the initial plan is to have Eletronuclear under the control of the government in accordance with the constitutional mandate. On the other hand, the Itaipu hydroelectric plant will be reviewed further as it is a bi-national power project operated by Brazil and Paraguay.


Image: Brazilian government plans to privatize Eletrobras. Photo: courtesy of sirirakphotos/FreeDigitalPhotos.net.