Nov 23, 2017

The privatization process involves companies in six states of the North and Northeast regions: Acre, Alagoas, Amazonas, Piauí, Rondônia and Roraima

The auction is expected to take place in the first quarter of 2018

The Brazilian Social and Economic Development Bank (BNDES) today (22/11) opened its data room for consultation; a virtual space with data about the six distributors of Eletrobras that are currently undergoing a process of privatization. In each of the companies, a physical room for consultation of documents and information that cannot be disclosed in the digital environment will also be provided. 

The goal is to subsidize potential investors who are interested in companies located in the North and Northeast regions of the country, which includes: Amazonas Distribuidora de Energia S.A., Boa Vista Energia S.A., Centrais Elétricas de Rondônia (CERON), Companhia de Eletricidade do Acre (ELETROACRE), Companhia Energética de Alagoas (CEAL) and Companhia Energética do Piauí (Cepisa).    

The process of privatization of the six distributors of Eletrobras is part of the Partnership and Investment Program (PPI), created by the federal government to strengthen the coordination of policies for investment in infrastructure through partnerships with the private sector. BNDES is responsible for the implementation and monitoring of the process of privatization. The Ministry of Mines and Energy is responsible for the coordination and monitoring of the privatization procedures. The distribution management of Eletrobras supports the interaction with the distributors. BNDES led the work done by the Mais Energia B Consortium (PWC, Siglasul e Loeser and Portela Advogados Associados) and CERES Inteligência Financeira, which consisted of the financial evaluation of companies and in the designing of the privatization model. 

The data room will remain open until five business days before the auction (expected to take place in the first quarter of 2018) and is the physical and/or virtual environment where documents, data, information, reports, access to systems and any other kind of information about the distributors and the privatization process will be made available.

The guidelines and details of qualification for the process are described in the respective Manuals of Diligence, available for consultation on the websites of Eletrobras, distributors and BNDES.

Schedule of the privatization process

In July 2016, the shareholders of Eletrobras decided on the non-renewal of the concessions of the six distributors, located in the states of Acre, Alagoas, Amazonas, Piauí, Rondônia and Roraima. The distributors started to act under the regime of temporary provision of the electrical energy distribution service, until the completion of the privatization process.  

On September 28th BNDES formally handed over the proposal for the privatization of the distribution companies to the Ministry of Mines and Energy (MME),. The MME then sent the study to Eletrobras and to the Investment Partnerships Program (PPI, of the Presidency of the Republic’s General Secretariat). On November 8th, 2017, PPI’s Council (CPPI) issued resolution No. 20, which adopted the companies’ minimum conditions for sale. Such conditions will need to be disclosed by Eletrobras during the General Shareholders Meeting to enable the completion of the privatization auction, which will also be coordinated by BNDES, with support from the Mais Energia B Consortium.

After the publication of CPPI’s resolution and the opening of the data room, public hearings will be held in the capitals of the states where the distributors are located. After the Tribunal de Contas da União (TCU –  Brazilian Federal Court of Auditors) approves the studies, BNDES will publish the auction’s call notice, which will be held at B3. The schedule that will be followed up to the time of the auction will only be defined after the approval of the minimum sale conditions by the Eletrobras Extraordinary General Meeting (EGM),.

Benefits of the privatization process

The privatization of the distribution companies of Eletrobras will allow a new shareholder that specializes in electric power distribution to optimize the companies’ resources, making them more efficient, considering their respective states’ consumer expectations. With the exchange of shareholding control, associated with a new concession agreement, the new companies will have the opportunity to regain financial stability and facilitate the implementation of the investments necessary to improve the quality of the service provided.

The improvement in the quality of electrical power supply can make the six states more attractive for receiving new ventures. The recent selling of CELG Distribuição, of Goiás, which was part of Eletrobras, is a demonstration of the attractiveness that the power distribution industry generates in private investors.