Feb 8, 2019

On this Friday, 8, the seminar “Privatizations in the Electric Sector: Federated distributors, the role of BNDES and institutional partners” took place, with the presence of the finance minister Paulo Guedes, BNDES president Joaquim Levy, ministers and authorities of the Federal Government, regulatory agencies, Eletrobras and the winning bidding companies. The event marked the conclusion of the Bank’s work in structuring the privatization projects of the Eletrobras System distributors.

The distributors Amazonas Energia, Boa Vista Energia, Cepisa, Ceal, Eletroacre and Ceron – federalized in the 1990s as part of the fiscal sanitation program of the States – were, in 2016, qualified by the Investment Partnerships Program (PPI), becoming eligible for privatization. It was then responsibility of the BNDES to execute such process. This role was defined in the National Privatization Program, according to Law no. 9491/1997.

From November 2016 to December 2018, the BNDES’s Area of Privatization and Project Structuring carried out steps to study technical modelling, articulation with state governments, investors, Eletrobras and control bodies, as well as the monitoring of auctions and liquidity events.

For president Levy, the role of the Brazilian Development Bank in solving infrastructure problems goes beyond excellence in technical execution that is typical of BNDES, also covering the articulation with the contract-letting government entity, regulatory agencies, investors and control bodies. “Besides agility and quality, we seek to cooperate with institutional partners to ensure compliance and legal certainty capable of making the asset interesting for the private sector and bringing the best to society,” he said at the opening of the seminar.

The market vision and sectorial knowledge of BNDES teams were compared by Levy to the bank’s capacity of using its balance of payment in the funding of projects. He emphasized that BNDES is ready to cooperate in privatization and in the new concessions in logistics, sanitation and transportation of natural gas, among other sectors, stressing that “the greatest contribution that BNDES offers is often its human resources, experience and capacity of balancing different interests. We provide solutions that bring advantages to all sides: investors, State and society.”

Following the president’s speech, the first panel of the event – “Electrical Energy Distribution, Development and Markets” – was attended by the ministers Paulo Guedes, general Carlos Alberto dos Santos Cruz (Segov), José Mucio Monteiro Filho (TCU) and the executive secretary Marisete Pereira, representing the minister admiral Bento Albuquerque (MME).

According to Paulo Guedes, the transition of the economic model practiced in the last decades must be completed, reducing the participation of state companies in the infrastructure areas and encouraging state and local governments to act more efficiently in health, education and public safety.

For Guedes, BNDES can play a transformative role, helping to overcome the problems caused by dysfunctional state-owned companies and to provide new concessions, even at the state level. “The privatization model applied to distributors must be replicated in other sectors. There is a lot of work to do,” he pointed out. The speech was accompanied by minister Santos Cruz. According to him, “The investor needs technical quality, legal certainty and honesty to invest. And that will be our focus.”

The executive secretary of the Ministry of Mines and Energy, Marisete Pereira, emphasized that another key for success is the articulation between the actors involved: “We only succeeded in privatizing the distributors because several bodies worked with the same objective,” she said. Similarly, the president of the TCU, José Mucio, said that the Court wants to be a partner of the initiatives from the beginning, already incorporating the competence of the control body.

Participating in the second panel – “Privatization of Federated Distributors” – the special secretary of Privatization and Divestment, Salim Mattar, defended that BNDES should use “the expertise accumulated in the structuring of privatizations and PPPs” to contribute in processes similar to those of distributors.

Also present in the second panel, Adalberto Santos de Vasconcelos, special secretary of the Investment Partnerships Program (PPI), highlighted what he considers as one of the main bottlenecks for the country to make progress in improving its infrastructure: “When I joined the PPI there was a portfolio of works, today we have an excellent portfolio of projects,” he said.

Also participating in the meeting were the president of Eletrobras, Wilson Júnior, and representatives of the Brazilian Electricity Regulatory Agency (Aneel), Energisa, Equatorial, Oliveira Energia. With the auctions of the six distributors, Wilson Araújo foresees relief in the holding company’s balance sheet, with the interruption of the contributions from public resources and the transfer of R$ 9.3 billion in debt to private controllers.

A rapid improvement in energy distribution services is also expected for the states served, benefiting around 13.6 million people. The new controllers – Energisa, Equatorial and Oliveira Energia – committed themselves to capitalize the companies by R$ 2.4 billion and to invest R$ 6.7 billion in the next five years, in the improvement and expansion of energy distribution services.