Brazilian electricity sector is on the verge of a significant change, as the government prepares to relinquish its control over Eletrobras, a key market player with presence in many Brazilian states and strategic public concessions within the energy generation and distribution markets. Eletrobras’s privatization has been in the works since early 2021 and the government wants to carry it out in the first half of 2022. The company hopes to attract billions of dollars in private investment by launching a capital increase and a follow-on public offering which would reduce the government´s stake to 45% or less.
However, Eletrobras’s proposed privatization has been called into question in both administrative and judicial courts. In this special edition of LS Brazil Outlook, our energy specialists discusses the likelihood that those proceedings may effectively block or reverse the transaction. As the Federal Audit Court (TCU) currently scrutinizes the follow-on offering, Luiz Felipe Calabró discusses the main points and most recent developments in TCU’s analysis. Rafael Zabaglia provides an overview of the claims filed before the Supreme Court against the law that authorized the follow-on offering and their potential impacts on the completion of the transaction.
On this issue | January 2022
Seizing the opportunity: The ongoing analysis of Eletrobras’s privatization by the Federal Audit Court as a means to improve energy price benchmarks and legal certainty
TCU is analyzing the numbers involved in Eletrobras’s upcoming privatization and flagged that there was room to improve energy price benchmarks and transparency in the composition of tariffs
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From the bench’s standpoint: is the Supreme Court a threat to Eletrobras’s privatization?
As claims are filed against the law that allows the government to give up control over Eletrobras, the Supreme Court will have the final word on such privatization. What is the risk that the court may spoil government’s plan for the company?
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