Letícia Fucuchima and Peter Siqueira, Reuters
SAO PAULO
EnergiesNet.com 04 22 2022
The privatization offer for Brazil’s power company Eletrobras (ELET6.SA) is now set to happen by July, the country’s Mines and Energy Minister Bento Albuquerque said on Friday, after the federal audit court TCU postponed for 20 days approval of the move.
In a virtual news conference during a visit to India, Albuquerque said that there was an advance in the process, even though the court delayed the final decision.
On Wednesday, TCU Judge Vital do Rego asked for another 60 days to further study the plan to privatize the company via a share offering, which would have effectively disrupted the timeline to privatize the company this year. But other members of the court reduced the delay to 20 days. read more
For months, TCU auditors have reviewed the plan to relinquish state control over Eletrobras, or Centrais Eletricas Brasileiras SA, Latin America’s largest utility. The company has proposed a share sale to raise at least 25 billion reais ($5.4 billion) while diluting the government’s stake to make it a minority shareholder.
Asked about the potential impact of Brazil’s October elections on the success of the privatization operation, the minister stressed that the market has shown “a lot of interest” in participating in the offer. “We believe, without a doubt, that it can take place by July this year,” he said.
The frontrunner in the polls for the October presidential election is Workers Party candidate and former leftist president Luiz Inacio Lula da Silva, who has said he would oppose privatizing Eletrobras.
Shares in Eletrobras were 3% down in late morning trading following Albuquerque’s comments, recovering some ground from a drop of 4.8% in opening trading on the Sao Paulo stock market.
U.S.-listed Eletrobras shares slipped 3.5% to $8.80 on Thursday due to the postponed court decision. The Brazilian utility’s ADRs are up 44% year to date, however.
Analysts at Ativa Investimentos said the failure to privatize Eletrobras in the current timeline is negative for the company, but it could still happen this year.
“Although this possibility is feasible, the proximity to the electoral period and the vacations in the Northern hemisphere may put execution of the process at risk,” they said in a note.
Reporting by Letícia Fucuchima and Peter Frontini; Editing by Emelia Sithole-Matarise and Bill Berkrot
reuters.com 04 22 2022
