Oct 15, 2020

 The Brazilian Development Bank (BNDES) begins today the process of presenting to potential investors the privatization project of CEB Distribuição, a company that holds the concession for the electricity distribution service in the Federal District. Known as roadshow, the presentations will be conducted until November. The notice should be published on the 5th of November, and the public bid session is scheduled for November 27. The criterion for choosing the winner will be the largest value offered.

According to BNDES’s director of Privatizations, Leonardo Cabral, the Bank’s role in this process is to promote a sale at fair value, in a competitive and transparent process. “The process will be conducted seeking to transmit the control of the company to a participant qualified to make investments and, consequently, improve the provision of services,” he declared.

BNDES is currently heading several privatizations at federal and state level in Brazil. The sale of CEB will provide greater efficiency to the service provided by the company, with operational and economic rationality and provision of services at reasonable rates.

“Since BNDES is a public bank with procedures oriented towards accountability to society and, at the same time, an agent that makes business with the private market, BNDES is naturally inclined to reconcile public interest and private appetite, leveraging value in conducting the privatization targets,” said Cabral.

On Tuesday (13), at an extraordinary general meeting, the shareholders of CEB S.A. approved the sale of CEB Distribuição based on a study conducted by Consortium Nova CEB, contracted by BNDES. On Wednesday (14), a public hearing was held, streamed live on YouTube, to provide enlightenment for the population and receive suggestions about the privatization process. The auction notice should be published in the coming weeks.

CEB Distribuição – The company provides electricity to over 1 million consumer units, populated by about 3 million people in a 5,800 km² area. The company is currently valued at R$ 1.4 billion, an estimated value from two independent economic-financial analysis.

BNDES was contracted to coordinate and execute the CEB-D privatization process in August 2019, in a context in which the company was presenting several defaults related to the quality of regulatory parameters in the provision of services and economic-financial toughness. Such a situation placed the company at risk of losing the concession to provide the service. If such risk had materialized, CEB-D would not only lose the opportunity to monetize the asset but would also face the prospect of a burden close to R$ 1 billion.

Faced with the prospect of noncompliance with the technical-operational and economic-financial sustainability indicators and as a way to make the concession maintenance feasible, the Ministry of Mines and Energy (MME) gave the company three years to accomplish balance, starting from August 2020; however, such deadline is conditioned to transferring its control. The change of management to a private group could improve CEB-D’s investment capability, consequently achieving all operational parameters and the provision of the best service for the population.

More information on the process.