The privatization of the electricity sector in Brazil has been boosted by the sale of Paranapanema, a generating company owned by the state of Sao Paulo, to Duke Energy for $683 million. The bid was 90 per cent above the minimum asking price for the electricity company.

The North Carolina-based energy group was competing with the Belgium company Tractebel for 71.3 per cent of the voting shares in the Brazilian company. The generator has eight hydro-electric power stations with a combined generating capacity of 2300 MWe. It serves both Sao Paulo and the state of Parana.

Duke Energy, which recently lost a battle to acquire control of the Chilean generator Enersis, plans to use its new investment as a base for its operations in South America.

The price paid for Paranapanema is being interpreted as a good sign for the sale of further electricity companies in Sao Paulo. The state government has already indicated that it intends to push to privatize Tiete, another generating company, by October.