Federal Autid Court approves privatization of Eletrobras

The process is expected to be completed this year

Published in 19/05/2022 - 09:02 By Pedro Rafael Vilela - Brasília

The plenary of the Federal Audit Court (TCU) approved on Wednesday (May 18), by 7 votes to 1, the privatization model of Eletrobras, a state-owned company considered the largest energy company in Latin America. This was the last pending step for the government to be able to carry out the privatization process of the company, which might take place this year.

Eletrobras` privatization had been approved by the National Congress and sanctioned by President Jair Bolsonaro in the middle of last year. The process still had to be analyzed by the Federal Audit Court to be concluded. TCU had already approved, in February this year, the financial model for privatization, and now it has validated the way in which the company will be transferred to private shareholder control, according to the process proposed by Brazil´s federal government.

Privatization

The process provides the capitalization of the company before it is privatized. This means first shares will be issued to attract new investors. The company's capital shall be diluted until the government´s share is reduced to 45 percent.

Eletrobras has been recording annual net profits since 2018. In the first quarter of 2022, the company registered a net income of BRL 2.7 billion ($ 544 million dollars).

In March 2021, the federal government announced the inclusion of Eletrobras in the National Privatization Program, claiming that the measure will enable the company to improve its investment capacity and contribute to the development of the Brazilian energy sector. Eletrobras owns one-third of the installed electric energy generating capacity in the country. The company also owns almost half of the total transmission lines.

After the so-called roadshow period, when Eletrobras is introduced to potential investors,  the company's auction will be held on the Brazilian Stock Exchange. The date of its privatization is still unknown.

Translation: Mário Nunes -  Edition: Paula Laboissière

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