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Brazil will allow private investors willing to buy into its state-held utility giant Eletrobras to obtain a maximum of 5 percent each, regardless of whether they are domestic or foreign investors, Brazilian Planning Minister Dyogo Oliveira has told the O Estado de S. Paulo newspaper in an interview.
At the end of last month, Brazil proposed a plan to put up for privatization 57 major state infrastructure assets, including selling some or all of its 51-percent stake in Centrais Eletricas Brasileiras—as Eletrobras is officially named—by the middle of next year.
Brazil’s government hopes to gain proceeds worth the equivalent of some US$6.4 billion (20 billion Brazilian reais) from the sale of the Eletrobras stake alone. Eletrobras controls transmission lines and electric generating plants throughout Brazil, and owns power distribution companies that are now being sold. Eletrobras accounts for almost one third of Brazil’s power-generating capacity and almost one half of the nation’s high-voltage transmission network.
Speaking to O Estado de S. Paulo, now Planning Minister Oliveira says that the exact cap for a single private shareholder has not been yet decided, but it would be at somewhere between 2 percent and 5 percent. The decision would come after a public holiday on Thursday, Oliveira noted.
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Brazil’s decision to privatize Eletrobras was cheered by investors who welcomed what they perceived as the government trying to reduce state meddling in corporate affairs, which has brought in the past a lot of troubles for a string of Brazilian companies, presidents, and governments. When the plan was first announced two weeks ago, it was unclear how the state-held stake in Eletrobras would be sold, but proceeds are expected to cut the budget deficit, according to deputy finance minister Eduardo Guardia.
“The overall perception is that the company can finally free itself from state control and that it will adopt meritocracy and negotiate better terms with suppliers,” Eletrobras chief executive Wilson Ferreira Jr told Reuters when the privatization plan was announced.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.