The Brazilian government's plans to privatise its Eletrobras electricity group have been given a key approval. Its subsidiary Eletronuclear will remain under state control and will have more ability to raise funds and make contracts to complete the third reactor at the Angra nuclear power plant.
"Despite being the largest power company in Brazil, Eletrobras currently does not participate in auctions for new projects due to lack of resources," said the Investment Partnership Programme Council (Conselho do Programa de Parcerias de Investimentos, CPPI), which was created to expand and accelerate public-private partnerships in the country. The CPPI's members include Brazilian President Jair Bolsonaro, several ministers, and the heads of strategic economic bodies.
Enabling Eletrobras to raise new funds from private investors and invest in new infrastructure will "open the way for the development of the Brazilian energy sector, motivating the creation of an attractive environment for investors, revitalisation of water resources and a structural reduction in energy generation costs," the CPPI said. This would make a marked difference to the last five years in which the Brazilian state has had to pump BRL4.8 billion (USD858 million) into Eletrobras, it said.
The government's plan is to restructure Eletrobras so that it can issue new shares for purchase by private investors. Controls will be in place to prevent any shareholder having more than a 10% say in decisions, and the Brazilian state will retain a 'golden share' granting it a veto.
The CPPI approved this yesterday, based on advice from the Brazilian Development Bank.
Importantly, the new arrangement would respect constitutional requirements to keep the nuclear subsidiary, Eletronuclear, under state control. The same applies to the Itaipu Binacional company, which administers the Itaipu Dam on the Paraná River on the border between Brazil and Paraguay.
For Angra 3, the changes should "finally make possible the completion of construction," said the CPPI. "These acts and contracts, in addition to ensuring the good governance of Eletronuclear, will allow that public investments made in the Angra 3 project are not lost, but revert to the benefit of Brazilian society," it said.
In July, two key contracts for the completion of Angra 3 were announced. A Tractebel-led consortium was selected to structure the completion of Angra 3, and a Brazilian consortium of Ferreira Guedes, Matricial and ADtranz were selected to do the construction work. In September, Eletronuclear signed a Memorandum of Understanding with Russia's Rosatom to develop cooperation in many areas of nuclear plant operation and maintenance, including new build.
The CPPI concluded a statement with this justification: "Brazil needs a strong, efficient and competitive Eletrobras, capable of facing the investments needed to meet the increase in electricity consumption. In this sense, capitalisation is essential for a promising future, not only for the company, but also for the electricity sector as a whole. To accomplish this mission, Eletrobras needs a substantial volume of resources, which the federal government does not have. Creating an attractive environment for investors will increase competitiveness in the sector, which in turn will reduce prices for the population."