Minister prepares privatization of the Eletrobrás system.
Brazil's Minister of Mines and Energy, Fernando Coelho Filho, said that the state-owned company's situation is "unsustainable" and that the government is preparing a plan to sell company assets, starting with distribution companies and minority stakes in power plants and transmission lines; "We are not going to liquidate Eletrobras," he said; "But there is a determination to redefine the role and size of the company."
SAO PAULO (Reuters) - The situation of the state-owned energy company Eletrobras, which has faced losses in the billions since 2012, is "unsustainable" and will require a review of the company's size and role in the country, said the Minister of Mines and Energy, Fernando Coelho Filho, this Friday.
He added that the government is preparing a plan to sell company assets, which should begin with distribution companies and minority stakes in power plants and transmission lines.
The minister denied, however, that there are any plans at this time to sell the state-owned company's largest subsidiaries that operate in power generation and transmission -- Furnas, Chesf, Eletronorte and Eletrosul.
"We are not going to liquidate Eletrobras," Coelho Filho told reporters after participating in a meeting with the vice-governor of São Paulo, Márcio França, and energy companies at the Palácio dos Bandeirantes.
"But it does have the determination to redefine the role and size of the company."
According to him, the government will prepare the privatization process with the support of the Ministry of Planning, the National Bank for Economic and Social Development (BNDES), and the ministry itself and its technical bodies, such as the state-owned Energy Research Company (EPE).
The idea is to start sales through the energy distributor Celg-D, which serves the state of Goiás. The privatization process had already begun underway under the Dilma Rousseff government, which even set a minimum price for the company and hired the BNDES (Brazilian Development Bank) to support the process, but never actually published the tender.
"The process will begin with Celg, especially since it's already well underway, but it won't stop there; the idea is to move forward... Eletrobras has around 180 SPVs (Special Purpose Entities), of all kinds... These are important, valuable assets, and it doesn't make sense to maintain all of them in the company's current situation," said Coelho Filho.
He also made it clear that the sale of Eletrobras' distribution subsidiaries should go ahead after Celg-D.
"It is very clear that the distributors should not be under the Eletrobras umbrella," he said.
The seven Eletrobras distribution companies serve not only Goiás, but also states in the North and Northeast regions, such as Acre, Amazonas, Alagoas, Piauí, Rondônia, and Roraima. The companies are accumulating losses due to high rates of non-payment and energy theft and losses in their markets.
Coelho Filho added that the government has not yet set a date for the Celg-D auction.
To finalize these decisions, the ministry is awaiting, among other things, the arrival of mathematician Luiz Barroso to the team. He is currently the director of the consulting firm PSR, but has already accepted an invitation to preside over EPE.
According to the minister, Barroso should take over the leadership of EPE by the end of the month.
(By Luciano Costa)