Copel sees ‘timing’ of privatization associated with renewal of hydroelectric concession

Copel sees in the privatization process, revealed this Monday (21), an important opportunity for the electric company to be able to renew the concession and preserve in the portfolio 100% of its main power generation asset, the Foz do Areia hydroelectric plant —which, under current rules, would need to have its control sold by the end of 2023.

In a videoconference this Tuesday to present a new strategic plan, Copel’s CEO, Daniel Slaviero, highlighted the relevance of the issue of Foz do Areia, signaling that the “timing” for privatization will be influenced by this discussion.

With 1,676 MW (megawatts) of installed capacity, the hydroelectric plant is Copel’s main generation asset, generating around R$450 million in annual Ebitda, and its concession expires in December 2024.

Because it is a state-owned company, Copel necessarily needs to sell control of Foz do Areia if it wants to renew the concession and maintain a stake, even a minority one, without facing an auction to rebid the asset.

“We have an appointment with reality, which is December 10, 2023, which is having to pay BRL 1.83 billion (as grant bonus), either keeping 100% (of the hydroelectric plant), or ( having) a private partner with 51%. This process (privatization) has to happen in this period, or at least a ‘dual track’, in parallel”, said Slaviero.

He pondered, however, that the company will not abandon the current sale process of Foz do Areia, which has already started. According to him, this will be done in parallel, in case the privatization does not take place.

Copel’s CEO also did not risk predicting a deadline for the government to obtain the necessary approvals for privatization. The State needs to get the approval of a law in the local legislative assembly – the bill on the subject has already been forwarded to parliamentarians – and also get the approval of the State Court of Auditors (TCE).

Asked about possible operational improvements that could come from privatization, Slaviero said that this would still be evaluated.

“This group that runs the company, which will continue running the company, imagine what we can do without strings attached. We are going to compete with Eletrobras, that is the tone”, he commented.

Paraná revealed the day before its intention to privatize Copel through a secondary share offering, in an operation similar to that carried out by Eletrobras. Copel would become a “corporation”, with no defined controller, with the government of Paraná remaining with a stake of at least 15% of the total share capital of the electricity company.

The BNDES, another important shareholder of Copel, could accompany the “follow on” of the State, although conversations for that have not yet started, said Slaviero.

PORTFOLIO DECARBONIZATION

Copel intends to reach 9 GW of power in its generating complex in 2030, which will only be composed of assets from water sources (56% share in the future), wind (29%) and solar (15%).

For this, the electric company must disinvest from the Araucária plant (UEGA), a thermoelectric plant powered by natural gas that operates in the “merchant” mode, that is, it does not have an energy commercialization contract, receiving revenue with the settlement of the energy generated in the energy market short term.

According to Copel executives, the idea is to take advantage of the fact that Petrobras has put its 18% stake in the plant up for sale, so that potential interested parties can buy up to the entirety of the asset.

Another planned divestment is that of Compagas, a piped gas distributor in which Copel owns 51%, with Mitsui (24.5%) and Commit, from the Cosan group (24.5%) as partners.

Santana said that the distributor is in the final stretch of the process of renewing its concession for another 30 years, which guarantees the attractiveness of the investment for a new buyer. Copel believes it can hold a Compagas auction “between 180 and 210 days” after the concession is renewed, he added.