Ministry may investigate FT energy collusion report
Bnamericas Published: Wednesday, May 21, 2003
Distribution Public-private partnership (PPP) Privatization Government program Legislation & Regulation
Brazil's government will likely investigate allegations that US power companies AES and Enron colluded to rig the 1998 privatization auction of Eletropaulo, Latin America's largest power distributor, Mines and Energy Minister Dilma Roussef said Wednesday. The Brazilian press Wednesday widely reported a case of alleged collusion between AES, and Enron, the bankrupt energy trader, to manipulate the auction of Eletropaulo. According to a five-month investigation by the Financial Times, the British daily, AES and Enron allegedly reached a deal, in April 1998, under which Enron agreed not to bid for Eletropaulo, which was being privatized by the Sao Paulo state government. In return, AES guaranteed Enron lucrative contracts to supply gas to a power plant AES and Enron would build to generate electricity for Eletropaulo. Roussef said, "If there were irregularities, measures must be taken. We'll analyze the case." Eletropaulo was snapped up for a minimum asking price of $1.78 billion by a consortium headed by Light, the Rio de Janeiro energy distributor. Other consortium participants were AES, Electricite de France (EDF), Houston Industries and steelmaker Companhia Siderurgica Nacional (CSN). The Sao Paulo government had been advised it could have fetched several hundred million dollars more for Eletropaulo, which serves about 14% of all Brazilian consumers, the FT report said. The AES/Enron story initially ran on FT's web site late Tuesday and has also been published in Wednesday's print edition. Brazilian business daily Valor Economico, for its part, sought out Luiz David Travesso, who acted as AES's representative in Brazil in 1998. Travesso released a statement in which he denies "any illicit dealings" involving Eletropaulo's privatization. Andrea Matarazzo, Sao Paulo energy secretary at the time, told Valor that analysts doubted Enron's capacity to join the race for Eletropaulo because it had already paid a hefty premium on another local utility, known as Elektro. AES President Paul Hanrahan told FT that the company has launched an internal investigation. He said: "AES does not tolerate illegal or unethical behavior in any form. Any AES people involved in such behavior will be dealt with promptly and in a manner consistent with our commitment to conduct ourselves in accordance with the highest ethical standards." by Sergio Caldas and José Ramos
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