Very usefull links


News links




Dow Jones

Oil price



Views and News





Brazil's new hurdles to energy auctions

Supreme Court throws cold water on Eletrobras unit sales. Progress stalls on bill that would allow major oil round.

By Sabrina Valle and Samy Adghirni

Petroleumworld 06 29 2018

A Brazilian government plan to sell billions of dollars in national energy assets to reduce the country's deficit has hit a series of roadblocks this week -- first from Congress and now from the Supreme Court.

Two Supreme Court injunctions Wednesday and congressional delays on Tuesday have raised new hurdles to the privatization of state-run power company Eletrobras as well as for the planned sale next month of some of its troubled units. They are also blows to Brazilian President Michel Temer's already-battered plan to sell 57 state-owned assets to help solve a budget crisis.

With just days left before a parliamentary recess and the country heading into an October election widely considered to be Brazil's most unpredictable in decades, the future of the asset sales may now hinge on the election results.

“This will probably be dragged on for the next government to deal with,” Pedro Galdi, an investment analyst with Mirae Asset Wealth Management, said in a phone interview from Sao Paulo after the congressional move Tuesday. “It all depends on politics and who will be the next president. The year is practically over.”

Supreme Court

In the latest development Wednesday, a Supreme Court justice barred the privatization of state-run companies, including units, without prior approval from Congress. With Eletrobras set to auction six of its power distributors on July 26, a second injunction suspended one of them and endangered the other five. The injunctions must be submitted to the full Supreme Court, but no date has been set. Eletrobras said in a regulatory filing late Thursday that it remained committed to privatizing its Companhia Energetica de Alagoas unit.

The privatization of Eletrobras, as the state-owned utility Centrais Eletricas Brasileiras SA is known, was once the crown jewel of outgoing President Temer's embattled asset-sale proposal. But his plan for a share sale started to fall through in May, with the government failing to overcome stiff opposition in Congress to changing legislation.

On Tuesday, Congress' lower house postponed until July 3 a vote to fast-track a bill that could help attract investors to the power distributors, responsible for 14 billion reais in losses to the company. The lower house also delayed taking up a separate proposal that would pave the way for a 100 billion reais ($26 billion) oil auction. The bills would need Senate approval and to be signed into law by the president.

Power Distributors

The spinoff of the troubled distributors -- which provide lighting for 13 million Brazilians -- would make it less difficult for Eletrobras itself to be privatized by a future government. But their attractiveness to investors depends on the proposed legislative changes and reduced liabilities, especially for four distributors in the north of the country, Galdi said. Wednesday's injunctions will likely further postpone voting on the bill.

The best hope for unlocking value from energy-asset sales this year may rest with oil, Galdi said. That's because both the government and Petroleo Brasileiro SA, the state-controlled oil and gas producer more popularly known as Petrobras , want the same thing -- the transfer of some of Petrobras's oil rights.

Petrobras is in negotiations with the government to review a contract that would pave the way for a multibillion-dollar auction planned for late November. But the proposal still hinges on legislation to undo nationalistic laws put in place by Worker's Party governments. And House Speaker Rodrigo Maia said in an interview Tuesday that discussion on that bill was also postponed until July 3.


Twitter: @petroleumworld1

Hit your target - Advertise with Us

Story by Sabrina Valle and Samy Adghirni; With assistance by Ney Hayashi Cruz from Bloomberg. 06 28 2018

We invite all our readers to share with us
their views and comments about this article.
Write to

By using this link, you agree to allow PW
to publish your comments on our letters page.

Any question or suggestions,
please write to:

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels

Twitter: @petroleumworld1

November 13 - 15, 2018.

Gubkin University, Moscow
SPE Student Chapter









Editor & Publisher:Elio Ohep/
Contact Email:

CopyRight © 1999-2016, Paul Ohep F. - All Rights Reserved. Legal Information

PW in Top 100 Energy Sites

CopyRight©1999-2017, Petroleumworld ™  / Elio Ohep - All rights reservedThis site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission fromPetroleumworld or the copyright owner of the material.