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Eletrobras Shareholders Avoid Energy Distributor Settlement But Demand To Stop Losses

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Eletrobras shareholders approved on Monday Jul 30th the extension of the term of operation of six power distributors in the North and Northeast of the country by the state by Dec 31st. The previous term expires today (Jul 31st). But the union, the state’s largest shareholder, conditioned its vote in favor of ending the losses with the temporary provision of the service.

“If I did not hold this meeting, tomorrow (today) they would be liquidated. Why did everyone agree? Because it would be much worse to have to liquidate the companies. No one is crazy about wanting this, “Eletrobras Chief Financial Officer Armando Casado said yesterday after the Extraordinary Shareholders’ Meeting.

According to Casado, the extension of the distribution system was approved by approximately 77% of the shareholders attending the meeting.

Government celebrated the result: “It was another important step for the benefit of electricity consumers in six Brazilian states and sustainability of Eletrobras,” said the agency Infra executive secretary of Mines and Energy, Márcio Felix.

Administration vote conditioned the process to receive resources
Administration, the largest company shareholder, voted for maintenance until December of the companies under the care of Eletrobras, but demanded in his vote that was guaranteed the “economic and financial neutrality of the operation.”

The text approved by the shareholders states that Eletrobras will remain responsible for the companies provided that “all the resources necessary to operate, maintain and make investments related to the provision of the service … are provided by the tariff, by the Union or by sector funds.”

The operation of the designated companies is deficient and has already caused losses of R $ 5.8 billion for the state-owned company since its inception on Aug 5th, 2016. Eletrobras maintains the companies for another five months – in the period between Aug 1st to Dec 31st this year – may represent an additional cost between R $ 1.8 billion and R $ 3.2 billion for the holding company, according to the convening document of the 171st EGM

To ensure the neutrality of the designation regime, Eletrobras president Wilson Ferreira Júnior sent the executive secretary of the Ministry of Mines and Energy, Márcio Félix, a letter stating that there is no perception of this guarantee in the state, according to the agency iNFRA in its edition 159th.

Márcio Félix also responded by stating that the economic neutrality of the temporary provision of services is guaranteed by Law 12.783, of 2013. “At the end of the appointment period, the person responsible for rendering the service shall be accountable to the National Agency of Electric Energy and to make the correct settlements of accounts with the granting power “.

Four distributors are with the auction scheduled for Aug 30th: Amazonas Energia, Ceron, Eletroacre and Boa Vista Energia. Ceal is suspended from the event due to an injunction granted by the STF.

In order to guarantee the financial viability of these companies, especially Amazonas, the Senate must approve the PLC 77/2018, which is the old PL 10.332 / 18, approved in the Chamber.

Last Thursday (26), the government managed to sell the first of them, Cepisa.

The company was bought by the Equatorial group, which committed itself to an investment of R $ 720 million and a tariff 8.5 percent lower than that proposed in the announcement, in addition to a bonus of R $ 95 million for the grant.