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Eletrobras may sell distribution units at a loss

By Luciano Costa

Petroleumworld 09 18

Centrais Eletricas Brasileiras SA, the state-owned power holding company that could be privatized as early as next year, will have to take losses to dispose of six power distribution units, a government source with direct knowledge of the process told Reuters.

According to the person, the Mining and Energy Ministry is following a recommendation by electricity industry watchdog Aneel to sell the six distribution firms to whichever bidder agrees to raise rates the least.

The model implies that the utility known as Eletrobras will not get new cash from these assets, also depriving the federal government of much-needed extraordinary proceeds to reduce a growing budget deficit, said the person, who requested anonymity because the discussions are preliminary.

Equatorial Energia SA, Neoenergia SA and Italy's Enel SpA are considering a possible purchase of some of the distributors, said the person. Investment firms and utility Energisa SA also could be interested, the person added.

“It has a lot of interest...with this change, companies have gained additional attractiveness,” said the person, who participated in talks with potential bidders.

Eletrobras declined to comment, saying the model of sale for the distributors was still being studied. Equatorial said they do not comment on market rumors. Enel and Neoenergia did not immediately respond to requests for comment.

The government said on Aug. 21 that it intends to sell control of Eletrobras by June 2018, with the distribution units expected to be sold separately later this year.

Mining and Energy Minister Fernando Coelho Filho said this week a model for privatization would be released this month, but sources subsequently told Reuters the plan could be delayed to as late as December.

Aneel has studied the possibility of raising the rates by around 10 percent for Eletrobras distributors before privatizing them, with the sale going to whoever accepts the lowest rate within this limit.

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