December 5, 2020

Bolsonaro sends to Congress a project that provides for the privatization of Eletrobras

The president of Brazil, Jair Bolsonaro, on Tuesday sent to the lower house a new bill for the privatization of the energy company Eletrobras, the largest power generator in Latin America, with which the Government expects to raise some 16.2 billion reais (some 4.050 million dollars).

The privatization of Eletrobras, which must first be endorsed by Parliament, would be concluded next year and is part of the agenda of reforms, concessions and privatizations proposed by the Bolsonaro Government to minimize the size of the State.

The signing of the bill was made by the president in the framework of an act in which he celebrated with his Government his first 300 days in power, which he assumed on January 1.

The Minister of Mines and Energy of Brazil, Bento Albuquerque, reiterated the Government's desire to capitalize on the company, which is losing market share.

Albuquerque said that if no measures are taken, Eletrobras will have only 15% of the power generation and 35% of the transmission within 10 years.

The minister also explained that the bill provides for the State to stop around 50% of the company's shares.

"We are optimistic regarding the processing of that project," Albuquerque said.

However, the energy privatization model will be given through the issuance of new shares, which will be sold in the market.

For the adoption of this type of capitalization, Eletrobras must pay 16,200 million reais (about 4,030 million dollars) to the public coffers, while the State would reduce its majority participation in the control of the company and would be left with less than 50% of the company.

This model would also imply changes in the terms of the company's hydroelectric power contracts, which would move away from the current regulated tariff model, known as the "quota system", and would allow the energy company to sell its energy at market prices, higher than currently applied.

According to the minister, the project foresees that the company will disburse approximately 8,000 million reais (about 1,990 million dollars) for the reduction of the electricity bill subsidies.

After the signature of the president, the bill must be processed in the Chamber of Deputies and, later, in the Senate.

The proposal is quite similar to that proposed by the Government of former President Michel Temer (2016-2019) almost two years ago, but that did not progress due to various political turbulences.

. (tagsToTranslate) Bolsonaro (t) Congress (t) project (t) privatization (t) Eletrobras

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