Brazil’s Congress approves bill to privatize Eletrobras

Σπύρος ΚλωνήςGlobal Markets

A plan to privatize South America’s largest state-owned energy provider has been approved by Brazilian lawmakers. Critics warn that privatization will increase energy costs.

The lower house of the Brazilian Congress passed legislation on Monday paving the way for the selling off of the state’s majority shares in South America’s largest energy company Eletrobras.

With the sale of its 61% stake in the utility giant, formally known as Centrais Eletricas Brasileiras SA, the Brazilian government is hoping to raise around 25 billion reais ($5 billion, €4.2 billion).

The chamber still needs to consider amendments to the bill, but the passing of the main text — with 258 votes for and 136 against — is seen as a victory for President Jair Bolsonaro’s right-wing government.

Left-wing parties oppose privatization plan

The legislation was able to pass through congress with conservative support, but drew heavy criticism too, especially from the left.

Critics have said that the move will increase the cost of electricity for consumers. Brazilians are already facing the threat of rising utility costs and potential rationing due to the country’s worst drought in almost a century.

Thermoelectric plants are having to make up for the shortfall by generating more expensive energy.

Government victory

The upper house gave its approval for the privatization of Eletrobras on Thursday, but added several amendments to the bill, including provisions to increase the output of thermal gas-powered plants while also rejecting subsidies for coal.

Nevertheless, the selling off of the state-controlled energy provider is seen as a victory for the Economy Minister Paulo Guedes whose political priorities include privatizing public companies, the Brazilian newspaper Folha de Sao Paulo reported.

A group of large industrial energy consumers opposed the changes made to the legislation, while still supporting privatization in general. They said that the amendments could cost consumers 56 billion reais.

Source:dw.com