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Brazil's council for the national partnerships and investments program (PPI) approved on Thursday the privatization model for state-run power company Eletrobras's energy distributors.
The model is part of the government's plan to privatize Eletrobras, which is a process that requires congressional approval. The government expects the approval to come by April next year, when tenders for the distributors could be launched.
Each of the six distributors controlled by Eletrobras - Boa Vista Energia, Companhia Energética de Alagoas (Ceal), Companhia Energética do Piauí (Cepisa), Centrais Elétricas de Rondônia (Ceron), Amazonas Distribuidora de Energia (Amazonas Energia), and Companhia de Eletricidade do Acre (Eletroacre) - are to be sold for US$15,400, a symbolic price due to their high debt levels.
Before the sale, Eletrobras will have to help in cleaning up the distributors' balance sheets, taking over a US$3bn debt load.
The lion's share of the debt is held by Amazonas Distribuidora, whose bill amounts to US$2.74bn.
The new concessionaires will have to immediately inject US$740mn into the distributors' capital, with Cepisa representing the highest value (US$222mn).
According to Brazilian development bank BNDES, the capital injection represents 30% of the total mandatory investments foreseen for the first five years of operations (US$2.4bn).
The privatization model gives Eletrobras the option to keep a 30% stake in each distributor, with the state company having to exercise this right within six months after the auctions.
The distributors will be sold separately, but there is no limit for a single group to acquire more than one distributor.