Yesterday the Brazilian government floated a proposal to privatize Centrais Elétricas Brasileiras SA (aka Eletrobras), the country’s largest power utility, as it struggles to close a record budget deficit, sending Eletrobras’ shares soaring in after-market trading.
The Mining and Energy Ministry communicated the plan to Eletrobras and said publicly that it would bring the proposal to President Michel Temer’s special council on privatizations. In a statement, the ministry said that the government will keep a right to veto some strategic decisions. Terms of the privatization are still undisclosed.
Temer has worked to attract private investment to Brazil’s energy and transportation infrastructure, but giving up control of a state-run company would mark a sharp contrast with other politicians’ wariness about unpopular privatizations. A successful sale of the government’s stake in Eletorbras would help Temer meet is recently widened budget target and avert a debt rating downgrade after Brazil’s worst recession on record.
The government sees its stake in Eletrobras as worth at least BRL 12 billion reais (USD 3.8 billion), a government source said.
Source: Reuters; August 21 2017