Energy Stocks Dip After Efrain’s MME Nomination – 03/17/2023 – Market

Shares of energy companies registered a sharp drop on the Brazilian Stock Exchange this Friday (17). The loss in value is a reaction from the financial market to the nomination of Efrain Pereira da Cruz to occupy the position of executive secretary at the MME (Ministry of Mines and Energy).

Sought after by the report, the MME, in a note, confirmed Efrain’s choice. A Sheet found that representatives of the energy sector were still making a last effort with members of the government to prevent the nomination from taking place.

Between the close of Thursday (16) and midday this Friday, when the nomination gained momentum, companies in the energy sector lost R$ 10 billion in market value. At 12:00 am, Energisa shares fell -8.3%, Equatorial, -4.6%; CPFL, -4.5%; Eletrobras, -4.5%; Neoenergy, -3.1%.

These declines are much sharper than those of the Ibovespa, the main stock exchange index, which started the afternoon down 1.18%, still reflecting fears regarding a possible banking crisis in the United States and the European Union.

According to managers interviewed by the report, who prefer not to be named, Efrain’s appointment raised the perception of political risk in the energy sector. Efrain, repeated professionals from different financial houses and banks, is associated with political groups linked to Centrão and seen as a representative of lobbies, especially in the gas sector.

Contacted by the report, Efrain had not responded to a request for comment until the publication of this text.

The falls are more pronounced in the shares of distribution companies, as they are more susceptible to decisions by the ministry, such as the one that will define the process of renewing concessions.

The fall of Eletrobras, which concentrates power generators, indicates that the reading that political interventions can prevail in government decisions has gained strength, increasing the risk of renationalization.

When director of Aneel (National Electric Energy Agency), Efrain repressed the analysis of themes considered vital for the sector, such as the refund of ICMS, and created a history of contradicting opinions of the technical areas and the agency’s attorney.

Almost three years after the new government took office, the MME still had no executive secretary, the main portfolio manager, due to disagreements between the new minister, Alexandre Silveira, and the Civil House. Second Sheet As it turns out, Silveira initially considered the name Efrain, but was dissuaded by industry executives, who warned about the negative perception of companies and investors in relation to the name. .

Silveira then started to defend the name of Bruno Eustáquio, who had been deputy secretary of the portfolio and executive secretary of the Ministry of Infrastructure in the previous government. As the executive held a position of trust in Bolsonarist management, he was vetoed by the Civil House.

With the refusal, Efrain got the support of senators like David Alcolumbre (União Brasil-AP) and the Minister of the Civil House, Rui Costa, and the agreement of Silveira.