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The Brazilian Chamber of Deputies approved on Monday a bill that makes viable the privatization of Eletrobras, the largest company in the electricity sector in Latin America, through the issuance of new shares without the participation of the State.
By 258 votes in favor and 136 against, the plenary of the Lower House gave the green light to the so-called “base text”, which defines the general lines of the measure, backed by the Senate last Thursday in a close vote.
According to provisional estimates, the privatization of Eletrobras, through this capitalization process, could yield the Brazilian State some 12 billion dollars.
The deputies had already approved the project last May, but had to analyze it again this Monday after some changes introduced by the Upper House last week.
The final endorsement by Parliament came almost at the limit of the deadline for its approval, since the text was presented by the Government in the form of a “provisional measure”, a sort of decree that requires the support of Congress and is valid for three months, which in this case ended on Wednesday.
The measure opens the door to the privatization of Eletrobras, something that the current president, Jair Bolsonaro, has promoted as part of his ambitious agenda of privatization and liberalization of the economy.
Within this framework, it is estimated that public participation in the company would be reduced from the current 60% to around 45%, through a public offering of shares on the Sao Paulo stock exchange, in which the State will abstain from participating.
The government also reserves a “golden share”, which would give it veto power in strategic decisions of the company.
In anticipation of the approval in the Lower House, the shares of Eletrobras, which is the largest energy company in Latin America, responsible for around one third of the generation in Brazil, rose around 3% on Monday.
According to government estimates, the capitalization process could result in revenues of around 60 billion reais (around 12 billion dollars) and would be carried out until the first quarter of 2022.
Eletrobras owns nearly half of the country’s transmission lines and substations, with a total extension of more than 70,000 kilometers of power lines and an installed generation capacity of around 50,000 megawatts (MW).
Last year, the state-owned company obtained a net profit of 6.387 billion reais (today about 1.27 billion dollars), a value 43% lower compared to 2019, due to the worse performance in the generation segment, among other factors.