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Financial News: BRAZIL: Government To Reduce Stake In Eletrobras To

BRAZIL: Government To Reduce Stake In Eletrobras To Less Than 40%

11/06/2017 - 20:12:00 (RTTNews)

(RTTNews) - The Brazilian government intends to reduce its stake in Eletrobras to less than 40%, said the Planning Minister Dyogo Oliveira during a presentation to investors in Madrid, Spain.

According to him, the state-owned power distribution company would offer new shares in B3 stock exchange in 2018, probably in the first half of the year.

The minister also presented to investors the portfolio of assets and concessions that the Brazilian government is putting for sale, which includes 89 projects with investment forecasts of R$ 104 billion.

The government intends to divest from stakes in eight roads, eight railroads, four mineral exploration areas, 25 port terminals, and 17 airports, among others.

"We want to make Eletrobras a strong global energy company. It needs investment to grow," Oliveira said.

The planning minister also announced that soon would be known the government decree detailing the process of privatization of Eletrobras. Last week, however, through the Secretariat of the Presidency of the Republic, the government claimed that it would send a bill to Congress to enable Eletrobras' privatization.

The Brazilian government expects to complete the privatization of the power company Eletrobras by the middle of 2018, and the asset sale process will involve all the power plants currently operated by the firm, except for Itaipu and Angra, according to the plans presented so far.

The government wants Eletrobras to bid for new concession contracts for some power plants it already operates. The new contracts would allow the company to set higher prices for electricity in those power plants.

Currently, some of Eletrobras' power plants operate under a particular regulatory framework in which payments amount only to the company's operating and maintenance costs. The price of the energy is lower than market prices under that scheme, but the company is exempt from some regulatory fees.

Eletrobras would have the right to choose whether to keep the plants under the new regime and would pay the government for the rule change. The company, however, would have to raise money for that transaction issuing new stocks. The new shares should cut the government's stake in Eletrobras from the current 63% to less than 40%.

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