Spotlight: Eletrobras getting leaner by the day

Brazil’s Eletrobras is moving forward with the rationalization of its subsidiaries and specific purpose entities (SPEs), a key initiative for the federal electric power holding’s privatization. 

Since 2016, the firm has reduced the number of SPEs by almost half, from 178 to 94. Among the companies sold were power distributors Ceron, Eletroacre, Cepisa, Boa Vista Energia, Amazonas Energia and Ceal, in 2018 and 2019, and, more recently, the Santa Vitória do Palmar, Campos Neutrais and Mangue Seco wind power complexes. 

The goal for 2021 is to cut another 45, ending the year at 49 SPEs. The rationalization process involves: 

– The termination of Baleia and Famosa wind complexes, comprising six and three SPEs, respectively; of Inambari Geração de Energia (Igesa), which is focused on hydroelectric projects in Peru; the Baguari hydroelectric plant; its strategic solutions center CSE; Construtora Integração; Manaus Construtora; and Amapari Energia; 

– The sale of Luziânia-niquelândia Transmissor (LNT) power transmission company; 

– The “unwinding” of the Chapada I and II wind complexes, comprising 15 SPEs, in order to be merged into Eletrobras’ subsidiaries;

– The merger (incorporation) of the Pindaí wind complex (11 SPEs) and the Transenergia Goiás (TGO), Fronteira Oeste Transmissora de Energia (Fote) and Transmissora Sul Litorânea de Energia power transmission firms.  

“The SPE rationalization is a strategic and priority project, which will continue with the business and management master plan (PDNG) 2021-25,” an Eletrobras spokesperson told BNamericas. 

Franceli Jodas, a partner at KPMG, highlighted that Eletrobras has, over the years, made investments that were strategic from a national standpoint, but not necessarily profitable. 

“What Eletrobras’ management is doing now is to rationalize these assets, leaving the core ones, as the company must be sanitized and turned into a more transparent firm prior to being sold. It is a way of organizing things for [development bank] BNDES to structure the capitalization model,” she told BNamericas. 

The PDNG 2021-25 also involves “operational, economic-financial and corporate structural synergies” of its companies via the shareholding restructuring of Eletronorte and Amazonas GT, where it holds 99.48% and 100% stakes, respectively.  

Other subsidiaries of the power holding include Chesf (99.58%), Furnas (99.56%), CGT Eletrosul (99.89%), Eletronuclear (99.91%) and Itaipu Binacional (50%). 

The latter two are not included in Eletrobras’ capitalization project, since Itaipu is also owned by the Paraguayan government, and because the constitution requires nuclear power generation to be controlled by the government. 

Eletrobras plans to invest 2.8bn reais in its SPEs by 2025, of which 2.01bn reais will be in generation and 816mn in transmission. The lion’s share is programmed for this year (1.43bn reais). 

The total capex foreseen for the five-year period is 41.1bn reais, with around 25% going to the construction of the Angra 3 nuclear power plant. 

Eletrobras will announce its first quarter financial results on Wednesday.