The Brazilian Federal Court of Pernambouco has suspended the measure on privatizing the state-held power company Eletrobras, stating that the government has not properly justified a measure that will substantially transform the domestic power sector. According to the Court, the laws on the power sector could not be modified without the participation of the National Congress. The Ministry of Energy and Mines (MME) will now submit a legal statement on the matter and expects to overturn the Court's injunction.
The Brazilian Ministry of Mines and Energy initiated plans to privatize part of its majority stake in the state-controlled utility Eletrobras. The Federal government currently controls 51% of Eletrobras' voting shares and 40.99% of its capital. The company has a power generating capacity of 46.8 GW, which represents around 31% of the country's capacity (as of 2016) and in particular a 50% stake (7 GW) in Itaipu Binacional, the company operating the 14 GW Itaipu hydropower plant. Besides, it operates about half of the country's transmission network (about 70,200 km of transmission lines). As of 2017, the company had a debt load amounting US$14.7bn.
The rationale behind the sale is to reduce the country's budget deficit and avert another debt rating downgrade. The company's total value is now estimated at R$20bn (around US$6.3bn) and the government could sell up to R$12bn (US$3.8bn). The privatisation would exclude key assets, such as the Itaipu hydropower plant and nuclear power plants.
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