The Brazilian president has signed into law the basic text of a bill allowing the privatisation of the state-owned power utility Eletrobras, following approvals of the text by the Chamber of Deputies in May 2021 and the Senate in June 2021. The Senate version withdrew a requirement for auctions to buy electricity from gas-fired power plants as a counterpart to the privatisation, but it maintained a requirement to contract gas-fired power capacity in the North, Northeast and Midwest (requirement raised from 6 GW to 8 GW). It also extends subsidies for coal-fired power plants from 2027 to 2035.
Eletrobras has a production capacity of 51 GW, which represents 30% of the country's capacity (2019). The State controls 42.57% of Eletrobras directly and 19.12% indirectly (10.23% through BNESPAR, 5.92% through BNDES, the national development bank, and 2.97% through government funds). The government is expected to reduce its stake in the company from over 61% to 45% through the sale of new shares on the Brazilian stock exchange B3. The privatisation is expected to take place in early 2022 and the government will retain a golden share. The privatisation plan excludes two Eletrobras affiliates: the Brazilian nuclear company Eletronuclear and its 50% stake in the 14 GW Itaipu hydropower plant shared with Paraguay. The privatisation is expected to raise around BRL25bn (nearly US$5bn). The proceeds should be used by the government to renew the company’s concessions for hydropower plants and transmission lines.
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