BRASILIA, June 22 (NNN-AGENCIES) — Brazil’s Congress passed a bill
Monday paving the way to privatize the biggest electric utility in Latin
America, state-controlled company Eletrobras, a victory for President Jair Bolsonaro’s privatization agenda.
The bill, which sets up a share issue that will dilute the government’s
stake in the company, passed the lower house by a vote of 258 to 136.
Lawmakers must still vote on a series of amendments before sending it to
Bolsonaro.
It had already passed in the Senate Thursday.
The legislation will reduce the government’s stake in Eletrobras from
51.82 to 45 percent, via a share issue penciled in for early next year that
the state estimates will raise 60 billion reais (around $12 billion).
Of that amount, 25 billion reais would go to the company’s coffers and the
rest to government programs, experts estimate.
The government will retain a “golden share” in the company, giving it the
final say on strategic matters.
Created in 1962, Eletrobras is one of Brazil’s “big four” state-controlled
firms, along with oil company Petrobras and banks Banco do Brasil and Caixa
Economica Federal.
It supplies around one-third of the electricity consumed in Brazil, Latin
America’s biggest economy.
But critics complain it is inefficient, bloated and needs more cash to
invest in modernizing its assets.
“Without privatization, Brazil’s energy system is going to end up in
chaos,” Bolsonaro had warned.
His economy minister, Paulo Guedes, has said the
privatization will save Brazilians up to 7.4 percent on electricity.
However, during a sometimes fiery debate in the lower house, opponents
warned the plan would in fact increase consumers’ electricity bills and
threaten Brazil’s control over its energy supply.
Opponents have also criticized amendments that would increase the amount
of electricity produced by heavily polluting thermoelectric plants.
It is a sensitive subject for a government already facing international
criticism over the destruction of the Amazon rainforest, a vital resource in
the race to curb climate change.
Eletrobras shares surged more than five percent Friday after the Senate
passed the bill, and gained another 2.21 percent Monday.
They have risen more than 40 percent on the year on expectations the
company would be going private.
Before that happens, Eletrobras must first transfer ownership of the
Itaipu hydroelectric dam and Angra dos Reis nuclear power plants to the
state, since Brazil’s constitution designates them as strategic assets.
The privatization comes just as Brazil faces an electricity crisis caused
by the worst drought in almost a century in the central-west and southeast,
key regions for the hydroelectric dams that supply the majority of the
country’s electricity.
The drought has led the National Water and Sanitation Agency (ANA) to
declare a “critical shortage of water resources,” effective until November,
for the Parana river basin, the heart of Brazil’s hydroelectric capacity.
The national electricity regulator has imposed an additional tax of 6.24
reais ($1.25) per 100 kilowatt hours on consumers for June because of the
electricity crunch — its highest extraordinary surcharge ever.
Rising electricity prices are fueling a surge in inflation, which came in
at 8.1 percent last month, well above the central bank’s target range of 2.25
to 5.25 percent.
Brazilians are fearing a return to painful electricity rationing
instituted in 2001.
The legislation is a win for Bolsonaro, who has struggled to implement the
privatization plans he campaigned on in 2018.
Politics and the pandemic have delayed the mass spinoff of state firms he
and Guedes had promised.
But those plans have started to pick up again, with lucrative concessions
in recent months for the operating rights to Rio de Janeiro water company
Cedae and a raft of airports, port terminals and a key railroad. — NNN-AGENCIES
