Brazil approves Celesc hydro divestiture plans

Brazil utility regulator Agencia Nacional de Energia Eletrica (ANEEL) has approved plans by Centrais Eletricas de Santa Catarina S.A. (Celesc) to separate its hydropower generation from its distribution operations and to sell its shares in two hydroelectric projects.

The Santa Catarina State utility is required to spin off its hydro plants by Brazil’s new power sector law that requires total separation of generation assets from the utility’s distribution system. Its shareholders voted in November 2005 to approve the planned divestiture, estimated at 200 million reais (US$91 million).

ANEEL approved the transformation of Celesc into a holding company with two subsidiaries, Celesc Geracao S/A to operate its hydro plants, and Celesc Distribuicao S/A to operate its distribution system.

Bundled into Celesc Geracao are the utility’s 12 small hydroelectric projects totaling 80.94 MW: 2.6-MW Ivo Silveira, 6.3-MW Salto, 5.4-MW Celso Ramos, 8.4-MW Cedros, 15-MW Bracinho, 3.82-MW Caveiras, 520-kW Rio do Peixe, 420-kW Sao Lourenco, 780-kW Pirai, 24.4-MW Palmeiras, 8.9-MW Garcia, and 4.4-MW Pery. Celesc eventually is expected to sell the generation unit.

ANEEL authorized the Celesc holding company to retain minority stakes in several entities. They include 12.16 percent of the 1,140-MW Machadinho project, 23 percent of the 125-MW Dona Francisca project, and 2 percent of the 880-MW Campos Novos project.

However, in a separate action, ANEEL gave approval and directed Celesc to sell its stakes in Machadinho and Dona Francisca.

For information, contact Chairman Miguel Ximenes de Melo Filho, Centrais Eletricas de Santa Catarina S.A., Rodovia SC 404 km 3, Bairro Itacorubi, Florianopolis, Santa Catarina 88034-900 Brazil; (55) 48-32315000; Fax: (55) 48-32316560; E-mail: celesc@celesc.com.br; Internet: www.celesc.com.br.

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