reviewing privatization of Eletrobras causes “concern”; company contests government

The president of the Chamber of Deputies, Arthur Lira (PP-AL), said he was concerned about the possibility of the government of Luiz Inácio Lula da Silva (PT) reviewing the privatization of Eletrobras, carried out last year. The concern arose after the Advocacy General of the Union (AGU) triggered the Federal Supreme Court (STF) to review points of the law that allowed the sale of the state-owned company, such as the voting power that the State has in the company.

Although this government action is not intended to claim the renationalization of Eletrobras, Lula said on Saturday (6th) that he still intends to file a lawsuit questioning the privatization.

Lira criticized the president’s speech, saying that these “questions of reviewing privatization are of concern”, and that you cannot change a process that “is already played and defined”.

“You can not propose any more privatization, but changing a framework that has already been played and defined, and with many groups, many countries investing, really causes Brazil a very strong concern.”, he told CNN Brasil this Sunday (7).

According to the president of the Chamber of Deputies, the privatization vote was widely debated in Congress and necessary to capitalize Eletrobras. Lira said that the state-owned company did not have enough capital for investments, and provided “poor quality” services.

“So, let’s follow up, see what the real intention will be in discussing this within the scope of the Judiciary. But I think that, within the scope of the Legislature, this matter was well discussed and transformed into a successful capitalization”, he added.

Company contests government

In a material fact disclosed to the market this Monday morning (8), Eletrobras contested the government’s action in the STF that asks for the review of the voting power in the company. The financial and investor relations vice-president, Elvira Cavalcanti Resta, states that the entire privatization process of the company “faithfully followed the legally established procedure, conducted by the BNDES and deliberated by the Investment Partnerships Program Council (CPPI)”, debated and approved by the National Congress and later validated by the Federal Court of Accounts (see full text).

Elvira says that an eventual decision favorable to the government by the Supreme Court may contradict the “legal and economic assumptions that underlie the investment decisions of the market – including the thousands of workers holding FGTS accounts -, based on a model developed by the Union itself”.

“The Company believes that the privatization process was carried out in accordance with Law n. 14,182 and the Constitution, and informs that it will evaluate the measures that may eventually have to be adopted by the Company, aiming at maintaining a reliable environment for making investments by Eletrobras in the country and the legal security of all its shareholders and the market in general”, he completes .

Eletrobras recorded a net profit of R$ 406 billion in the first quarter of this year, according to a balance sheet released last week (see full text). The result is 85% lower than that recorded in the same period last year.

Net operating revenue grew 13% and totaled R$9.2 billion between January and March 2023.