Temer Administration Is Planning on Privatizing Brazil's State-Controlled Power Company Eletrobras

08/22/2017 - 10h37

Advertising

NICOLA PAMPLONA

FROM RIO JULIO WIZIACK

FROM BRASÍLIA

The administration of president Michel Temer (PMDB) is planning on privatizing Brazil's state-owned power holding Eletrobras.

On Monday (21), the Mines and Energy Ministry proposed selling a portion of the Union's Eletrobras shares, adopting the same strategy used in the Embraer and Vale privatizations.

The president's aides did not specify what the government's stake in the company would fall to – they simply mentioned using the stock market to "democratize" the company.

Folha has learned that the government is planning on withdrawing its ownership via a public offering. However, the government would still be able to exert veto power when it comes to making strategic decisions.

While the Union holds direct ownership of 40.99% of the company's shares, the Brazilian Development Bank (BNDES) holds 18.72%. Federal funds amount to 3.42% of the company's shares. The ministry has stated that the move "will bring more competitiveness and agility" to the company.

Behind the move is the goal of obtaining R$ 30 billion (US$ 9.5 billion) in revenue in order to attack the country's 2018 deficit.

After the announcement, the company's stock went up by 21% on the New York stock exchange once markets closed.

The president of the Eletrobras Employees' Association said that privatizing the company would be bad for the country.

Translated by THOMAS MATHEWSON

Read the article in the original language