Put:Antonio Carlos Mazzucco

Provisional Measure 1031 of 2021, which provides for the privatization of Eletrobras, a giant holding company in the electricity sector and which is part of the state-owned companies created during the Getúlio Vargas government, in his term from 1951 to 1954, sent in February to the National Congress, was approved by the Chamber of Deputies and must be voted on by June 22 by the Federal Senate to remain valid.

Eletrobrás owns a series of generation companies, such as hydroelectric plants, and energy transmission and other plants spread throughout the country, such as Furnas, Eletronorte (owner of Tucuruí) and Chesf (owner of Sobradinho), in addition to Amazonas GT, CGT Eletrosul and Cepel.

However, the privatization of the state-owned company will not be complete. The Federal Government currently holds 51.8% of the common shares, which give the right to vote in decisions; with the participation of BNDES and federal funds, the Federal Government holds 72% of Eletrobrás in common shares. With this measure, the government's stake will be reduced to less than 50% and, therefore, it will no longer be the controlling shareholder, losing exclusive decision-making power over the company, although it may deliberate together with the new shareholders.

It is important to emphasize that Itaipu and the Angra nuclear plants, which are part of Eletrobrás, will not be transferred, since Itaipu is binational – it has shared management with Paraguay, as it is on the border – and in the case of Angra, the exploration of nuclear services and facilities, according to the Federal Constitution, is the responsibility of the Union.

Thus, the privatization will be carried out through a capitalization process, a type of privatization in which shares will be reallocated, i.e., the Union will not sell its securities, but will only issue new ones, which aim to reduce debt and finance investments. Furthermore, the Union will gain the right to have a special type of asset, known as a “golden share”, which allows certain decisions to be made by just one shareholder, even if he or she is a minority shareholder, which entails the power of veto in exceptional situations.

It can be said that Eletrobras will be more or less similar to Vale, in which the government has a small stake and the shareholders dictate the company's direction. In the case of the golden share in Vale, the government can use it to prevent a change of headquarters, corporate name, liquidation of the company and separation of assets such as mines and railways.

The proposal approved by the Chamber of Deputies determines as a condition for privatization a) revitalization of water resources in the São Francisco River basin, directly by Eletrobras or, indirectly, through its subsidiary Companhia Hidrelétrica do São Francisco – Chesf; b) structural reduction of energy generation costs in the Legal Amazon, directly by Eletrobras or, indirectly, through its subsidiary Centrais Elétricas do Norte do Brasil SA – Eletronorte; and c) revitalization of water resources in the hydrographic basins in the area of influence of the reservoirs of the Furnas hydroelectric plants Centrais Elétricas SA – Furnas, whose concession contracts are affected by this Provisional Measure, directly by Eletrobras or, indirectly, through its subsidiary Furnas.

The rapporteur in the Chamber changed the text, presenting the proposal to condition the privatization of the state-owned company on the contracting, through an auction, of energy from gas-fired thermal plants, involving 1 gigawatt in a state in the Northeast region, and 5 gigawatts divided between the North and Central-West regions. He also determined that the surplus of energy sold by Itaipu from 2023 (when the payment period for the construction loan ends) should be divided into 75% to reduce charges on consumers' electricity bills and 25% for government social programs.

The estimate is that the measure will increase the company's investments from R$3 billion per year to R$15 billion/year with the capitalization, and therefore, the operation is a bet to increase the company's investments and improve the services provided. However, the condition for contracting energy produced by thermoelectric plants may become more expensive and the energy consumer will pay more for the system to guarantee preference for natural gas-fired thermal plants.