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Eletrobras Emphasizes in Statement That the New State-Owned Company Will Not Be Created Immediately. This Will Only Happen Upon “Approval of the Bill by Congress”
Even with Congress’s resistance to expedite the privatization of Eletrobras, at the end of last month, the Ministry of Mines and Energy requested the inclusion of R$ 4 billion in the Federal Budget for 2021 to create the state-owned company that will take over the assets of the company after the sale. Eletrobras Group Company Will Invest R$ 1 Billion in Hydroelectric Plants in Bahia
This transfer is part of the federal holding company’s privatization program for the energy sector. Eletrobras itself informed the stock market on 07/22 about the request submitted to the Ministry of Economy.
The funds would be necessary to ensure the Union’s participation in the capital of the new company, which, according to technicians involved in negotiations, could cover at least part of the construction of the Angra 3 plant in Angra dos Reis (RJ), which has been halted since 2015.
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The new state-owned company will be created based on Bill No. 5,877/2019. This company, therefore, will enable the Union to continue holding control of Eletrobras Termonuclear S.A (Eletronuclear) and shareholding in the UHE Itaipu Binational. Finally, the future company will also be responsible “for the Union’s assets under Eletrobras’s management and for government programs.”
One studied option would be to propose to a private interested party a stake of no more than 49% in the company or in the plants. In the case of Angra 3, China and the USA – which are engaged in a commercial and geopolitical dispute – want to become partners. Russians and French are also considering joining this business.
The justification for keeping these activities in the hands of the Union is that there would be legal difficulties to transfer them entirely to the private sector.
In the case of the Angra generators, the obstacle lies in the Constitution. It prohibits private exploitation of nuclear energy —currently exercised by Eletronuclear, a subsidiary of Eletrobras.
However, Eletrobras emphasizes that the new state-owned company will not be created immediately. This will only happen upon “approval of the Bill by Congress.”
Read Other News About Eletrobras
- Eletronuclear Will Present to ELETROBRAS Its Plan for Accelerating the Construction of the Angra 3 Nuclear Plant
- Privatization of Eletrobras Generates Expectations of R$ 16.2 Billion for the Government
- Finally, the Construction of the Angra 3 Nuclear Plant Begins in October 2021
In any case, bringing the two companies into one holding company opens up space for the government to also utilize hydroelectric resources in the future to offset the deficit in Angra.
The debt of Itaipu is maturing, freeing the company from these obligations starting in 2023. This, in the view of those who support the plan, would spare consumers from further rate increases. With Itaipu and the revenues from Angra 1 and 2, it would be possible to complete Angra 3, and the combined revenues could later be used for new projects or to pay dividends to the government. It is estimated that the plant will require investments on the order of R$ 17 billion.
The reorganization of Angra and Itaipu began to be planned during the Michel Temer administration (MDB) and was revived in the Bolsonaro administration. The plan is a condition for the privatization of Eletrobras and is included in the Executive’s bill for the sale of the company, which enables a new state-owned company for these activities.
But the text, sent in November 2019, has not yet made progress. To proceed, it depends on the approval of the President of the Chamber of Deputies, Rodrigo Maia (DEM-RJ). Maia says that the privatization of Eletrobras is essential, but that there are other priorities at the moment, such as defending the spending cap and reforms. For him, Congress should not address controversial issues right now.
Even before the pandemic, the privatization of the company was seen as something difficult to approve. The sale has been publicly treated as a priority since the Temer administration.
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