Brazil’s Senate approves Eletrobras privatization bill

RIO DE JANEIRO, BRAZIL – Brazil’s Senate voted on Thursday, June 17, to approve the basic text of a bill allowing the privatization of state-controlled energy giant Eletrobras, but the measure must return to the lower house for final passage due to changes made by senators.

Lower house Speaker Arthur Lira has called an extra session on Monday to vote on the bill.

The legislation would privatize Latin America’s biggest power utility, known formally as Centrais Eletricas Brasileiras SA, by floating shares on the stock market, with the state relinquishing control by diluting its current 61% stake down to 45%. The government will retain a golden share to veto hostile takeovers and other strategic threats.

Brazil’s government expects to raise roughly R$25 billion (US$4.95 billion) from the share sale. The proceeds will go to the Treasury to pay for the renewal of concessions for Eletrobras hydroelectric plants and transmission lines.

The privatization of Eletrobras, proposed by President Jair Bolsonaro, has met with opposition from politicians, mainly on the left.

To win support, Congress added provisions including the mandatory commission of gas-fired thermoelectric plants in key regions that critics said would push up electricity prices.

The Senate version passed on Thursday increased the thermal gas plant requirement to 8,000 MW from 6,000 MW to include regions closer to where gas is produced, reducing imports. The plants would be built under 30-year private concessions.

Senator Marcos Rogerio, who presented the changes late on Wednesday, said the thermal plants would not increase the cost of energy. He rejected an amendment extending subsidies for coal-fired power generation.

Mines and Energy Minister Bento Albuquerque said the privatization was vital for Brazil at a time when it is facing the threat of electricity rationing due to the worst drought in nearly a century.

“The capitalization of Eletrobras will mean rates will not rise in 2022 and consumers will have better services due to more investments,” Albuquerque said in an interview on GloboNews.