Reporter of the privatization of Eletrobras at TCU withdraws process from the agenda

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Reporter of the privatization of Eletrobras at TCU withdraws process from the agenda

The minister of the TCU (Court of Accounts of the Union) Aroldo Cedraz removed from the voting agenda, this Wednesday (8), the privatization process of Eletrobras.

During the session, Minister Walton Alencar asked Cedraz what the reason for “the withdrawal of the most important process of the day”.

Cedraz explained that he had received “new manifestations from the executive power and society” about possible weaknesses in the privatization model. He said, however, that he will present the report and his vote next week.

According to TCU officials, there were no new manifestations this morning that would justify the postponement. All inquiries made by the Public Ministry of Accounts with the TCU were sent to the rapporteur more than a month ago.

A leaf had access to this document. In it there are several controversial points pointed out by prosecutor Rodrigo Medeiros de Lima.

The main ones point to an undervaluation of around R$ 16 billion in Eletrobras assets due to the choice of a supposedly wrong pricing model.

The prosecutor also found problems in the advance for 2022 of R$ 5 billion to be transferred from the concession bonus for the amortization of the energy price for residential consumers.

This tariff reduction will occur through a deposit in the CDE (Energy Development Account) which, at the end of the privatization operation of the state-owned company, will have R$29 billion. A portion (R$ 5 billion) would be anticipated to reduce the price of energy in 2022, an election year.

as showed the leaf, recently, the biggest generators and the main energy consumers sent a letter to the Ministry of Mines and Energy, BNDES and EPE (Energy Research Company) to complain that the Eletrobras privatization model considers data that will allow the government to receive between R$ 10 billion and R$ 20 billion more than due in the share sale process, scheduled for next year.

This difference is due to a drastic reduction in the amount of energy that Eletrobras’ hydroelectric plants were able to sell during the water crisis (about a thousand megawatts) and which was not taken into account in the calculation of the value of the business.

The Ministry of Mines and Energy is reassessing these distortions and, according to advisers at the TCU, the matter will also be analyzed by Cedraz.

A one-week delay will not jeopardize the government’s programmed privatization schedule. If the minister takes longer to present his vote, the sale of Union shares on B3, the São Paulo Stock Exchange, may be delayed. The initial forecast is that it will take place in May 2022. If this is not confirmed, there will be risks that the process will be left to the next government due to electoral campaigns, which will mean a strong setback for the government.

According to the model defined by the BNDES, the initial (primary) offer of the Union’s shares in Eletrobras should be R$23.2 billion. If that is not enough, there will be a new round until the government’s share of the company drops to 45%.

However, the operation as a whole —which includes the migration of Eletrobras plants to the “free market”, the deposit of R$29 billion to amortize the energy price via CDE, and the investment commitments on the São Francisco river— it should move between R$ 130 billion and R$ 140 billion, if modeling corrections are made.

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