A group of 13 banks have pledged a loan of BR11.2 billion ($5.1 billion) for Brazil's electric power sector.
A group of 13 banks have pledged a loan of BR11.2 billion ($5.1 billion) for Brazil’s electric power sector.
The loan is part of a government-led rescue package for the country’s electricity utilities, which are suffering financially because of high electricity prices caused by a prolonged drought.
The money will be loaned to the Brazilian electricity market operator, CCEE, which will in turn loan money to power companies.
The loans will be repaid from next year using money generated by increases in electricity bills.
The states of Sao Paulo and Minas Gerais in southeastern Brazil have suffered their worst droughts in decades. Reservoirs in the southeast and center west regions of the country are currently at 36.73 per cent of their capacity, compared with 54 per cent a year ago and 78.5 per cent the year before that, according to Brazil’s national grid operator, the ONS.
Spot prices for electricity in Brazil reached $366/MWh in January, more than three times normal rates.
The syndicate of banks will be composed of Banco Bradesco, Itau Unibanco, Banco Santander, BTG Pactual, Citibank, J.P. Morgan, HSBC, Banco Votorantim, Credit Suisse, Bank of America, Goldman Sachs, Banco do Brasil and Caixa Economica Federal.