Privatization to move ahead in Brazil with Cesp, possibly Eletrobras

Cesp (Companhia Energetica de Sao Paulo) in Brazil has resumed its partial privatization process, which was previously under way but suspended last September.

The decision came after the federal government signed a decree that would assure “the private group taking over the company is granted a 30-year concession contract over the state-run company’s power plants,” according to BNamericas. The decree was signed by Rodrigo Maia, Chamber of Deputies president and then-acting president of Brazil.

For Cesp, this action extended the company’s concession for the 1,540-MW Porto Primavera hydro project. Cesp’s Porto Primavera concession now lasts until 2048, strengthening the company’s position and increasing its chances of a private sale.

Brazilian President Michel Temer announced reforms in August 2017 that would privatize many sectors in the country, including electricity. The reported goal of this “privatization package” is to reverse the country’s economic stagnation.

Critics are concerned the decree could drive electricity costs up by giving control to private corporations.

As part of this move, Cesp plans to sell a 40.6% stake in three hydroelectric plants with a combined capacity of 1.65 GW. The specific names of the plants were not released.

Cesp has installed generating capacity of 7,455 MW. The company is responsible for about 58% of the energy generated in Sao Paulo State and for almost 12% of the total power produced in Brazil.

The new decree is also expected to facilitate the sale of Eletrobras’ hydroelectric plants that are not subject to the quota regime established by former president Dilma Rousseff. This includes the 8,370-MW Tucurui hydro plant, which has a concession in effect through 2024. However, earlier this month a Brazilian federal judge issued a ruling intended to block any presidential decree that would privatize Eletrobras.

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