Cesp in talks to extend brazil's power dam licenses, official says
Petroleumworld 10 12 2017
Brazil may extend the operating licenses for power dams held by Cia Energética de São Paulo SA (Cesp), a government official told Reuters on Wednesday, seeking to bolster bidder demand for the soon-to-be-privatized utility.
Deputy Energy Minister Paulo Pedrosa said the state of São Paulo, which holds a controlling stake in Cesp, is negotiating with the federal government to allow a future controlling shareholder to renew the operating licenses in exchange for a one-off payment to the National Treasury.
The state had originally hoped to sell its stake in the power utility in September but called off the auction due to weak demand. Potential bidders said the expiration for Cesp's three power dams, between 2020 and 2028, was too close to justify meaningful investments.
“Back then, there was no convergence between the positions of the São Paulo state and the Finance Ministry about how to split the benefits,” Pedrosa said.
Cesp operates three power dams with a combined capacity of 1.65 gigawatts in the state of São Paulo. Extending its licenses could increase the company's valuation while, at the same time, boosting government revenues.
The transaction is one in a series of privatizations and sales of stakes in state assets meant to improve investments in Brazil's ageing infrastructure as well as the business climate.
It could also help to curb growth of public debt, which investors see as critical to boosting long-term growth of Latin America's largest economy.
Story by Luciano Costa; Writing by Bruno Federowski; Editing by Jeffrey Benkoe from Reuters.
reuters.com 10 11 2017
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