Privatization of Eletrobras is the perfect legal instrument – 05/05/2023 – Market

Under attack by the government, the president of Eletrobras, Wilson Ferreira Junior, defended this Friday (5) that the company’s privatization process is a “perfect legal instrument” and that any changes in command of the company must follow laws that govern companies with stocks traded on the stock exchange.

In an interview to comment on Eletrobras’ profit in the first quarter, he also defended that privatization improved the company and brings advantages to the country, which gains a corporation with greater investment capacity.

Opponent of privatization, President Luiz Inácio Lula da Silva (PT) has been stepping up an offensive to try to reverse the process. In addition to asking the AGU (Attorney General of the Union) to prepare an action of unconstitutionality, he is now trying to force changes in the company’s command.

Ferreira said that he was never approached with demands about his departure and that, if the government is interested in making changes in command, it will have to follow rules established by the CVM (Securities and Exchange Commission) and its American equivalent, the SEC.

“The advice [de administração] is elected at a shareholders’ meeting, I have no participation in that. And the council is the one who chooses the president”, he stressed. The current council was elected in August 2022, with a mandate until 2025.

It was composed mostly of members with no connection to the Bolsonaro government, with the exception of Marisete Pereira, who held a post at the MME (Ministry of Mines and Energy).

Appointed by former President Michel Temer to prepare for the privatization of Eletrobras, Ferreira Junior began his second stint at the command of the state-owned company on September 19, 2022. This week, he swore in his new board, completing an organizational restructuring process.

The government questions the decision-making power in the company resulting from the privatization: although it has about 35% of the shares, it can only vote with a total of 10%, according to the limitation imposed by the statute to prevent any group from having control of the company.

Ferreira argued that this model increases Eletrobras’s efficiency and creates a large Brazilian corporation, along the lines of Embraer and Vale. Among the advantages, he claims, is the increase in the company’s investment capacity.

“The biggest advantage of the capitalization process is the fact that the company can be an investor in Brazil”, he says. He cited data from the first quarter, in which the company tripled the volume of investments compared to the same period of the previous year.

He also said that the new capital structure of Eletrobras will allow to triple the annual investments, going from R$ 4 billion to R$ 12 billion. “I have followed President Lula’s interest in increasing investments in Brazil and the company is an example of that,” he said.

Company executives also listed the transfers of resources guaranteed by the privatization process. The CDE, which supports subsidies on the electricity bill, has already transferred R$ 6.6 billion. There are also transfers to funds for investments in river basins and the Amazon.

Although the company has carried out a series of voluntary dismissal programs in recent years, Ferreira Junior also mentioned a recently launched tender for hiring personnel. “This company hasn’t hired people since 2009,” she said.

The dismissal programs, he claims, are an incentive for employees who have already retired to leave, a category that represented 25% of the company’s workforce. A new program, with up to 1,500 employees, is expected to launch in May.