The government will hold a golden share in the company to veto hostile takeovers
Brazil approves Eletrobras privatization. (Credit: Michael Schwarzenberger from Pixabay.)
Brazil’s lower house of Congress has passed a bill for the privatisation of state-controlled energy company Eletrobras.
The bill will now be sent to President Jair Bolsonaro for this signature.
The privatisation bill was passed with 258 votes in favour, 136 opposed and five abstentions, and faced opposition from politicians, primarily on the left, reported Reuters.
Under the government-proposed bill, Centrais Eletricas Brasileiras will be privatised by floating shares on the stock market, with the state diluting its 61% stake.
The Brazilian administration is anticipated to receive nearly BRL25bn ($5bn) from the sale, and the proceeds will be used for the renewal of concessions for Eletrobras hydroelectric plants and transmission lines.
The government will hold a golden share in the company to veto hostile takeovers. The bill saw the addition of provisions that include compulsory commission of gas-fired thermoelectric plants in key regions, to gain support among lawmakers.
The privatisation bill is anticipated to increase the thermal gas plant requirement from 6GW to 8GW.
Also, senators rejected an amendment to the bill that could have extended subsidies for coal-fired power generation.
The privatisation for Eletrobras comes at a time when Brazil is facing the threat of electricity rationing due to a severe drought.
ABRACE, which is represented by large industrial consumers, estimated that the passed bill would cost consumers BRY56bn ($11.6bn), with half of it to be used to build gas-powered plants in places where there is no natural gas.