Press Room

27 May, 2021

On May 20, 2021, the Brazilian House of Representatives approved the text for the conversion into law of Provisional Measure No. 1.031/21 (“PM”), which deals with the privatization of the major State-owned electricity company Centrais Elétricas Brasileiras S.A. – Eletrobras.

After many discussions, the approval of the text should be celebrated, since Eletrobras’ privatization is much needed to allow it to own the conditions to invest and maintain its position as an important player in the Brazilian electricity market. Under the control of the government, Eletrobras has been repeatedly losing its investment capacity and its importance.

The main aspects of the PM are: (i) the extension for 30 (thirty) years of the concession of the plants under Eletrobras’ control; (ii) the change in the exploitation regime for the Independent Power Producer, via the termination of the quota regime and the consequent permission of free negotiation of the electricity generated by Eletrobras and its subsidiaries into the market.

The privatization will be made feasible through Eletrobras’ capitalization followed by the dilution of the government’s participation in the company from 60% (sixty percent) to 45% (forty-five percent). No shareholder or a group of shareholders will be allowed to own more than 10% (ten percent) of share participation in Eletrobras, so as to allow for the company to become a corporation with a diluted capital in the stock exchange market. However, the Brazilian Government will have a golden share that gives it veto rights over some subjects taken for a vote on the company’s shareholders’ meetings, a proposition that makes complete sense considering the company’s important role for the country.

The PM will now be sent to the Senate for appreciation and voting. In the case Senate makes any change to the PM it will be sent back to the House of Representatives for a new voting. After that it will be submitted for the sanction of the Brazilian President.

Our Energy team is following up close on the matter and is at your disposal for further clarifications on these matters.