May 6, 2015 / 7:01 PM / 5 years ago

UPDATE 1-Brazil's Eletrobras may sell power distribution assets -source

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BRASILIA, May 6 (Reuters) - Centrais Elétricas Brasileiras SA, Brazil’s largest power holding company, is considering selling controlling stakes in several power distribution companies to focus on generation and transmission of electricity, a source with direct knowledge of the situation said on Wednesday.

Eletrobras, as the state-controlled company is known, could start the sales process this year, the source said. The distribution assets, especially in the poorer, more remotely populated north and northeast parts of the country, have often been a source of losses for the cash-strapped power company.

“The idea is to sell controlling stakes in all the power distribution companies (currently controlled by Eletrobras),” said the source, who is not authorized to speak to the press.

“We want to start the process this year, after the renewal of the operating licenses.”

The move, if confirmed, would underscore President Dilma Rousseff’s efforts to streamline the size of state companies, whose rapid growth of recent years have put public finances under pressure. By focusing on generation and transmission, Eletrobras is likely to invest more efficiently as money-losing distribution operations in some states have drained much of its capital for years.

Celg D, a distribution company in the center-west state of Goias that was acquired by Eletrobras earlier this year, should be included in the sales process, the source said.

Signaling that was the publication in the Brazilian official gazette on Wednesday of a recommendation from the National Council on Privatization favoring the disposal of the company.

The source said Eletrobras is also willing to sell controlling stakes in companies in the states of Alagoas, Piaui, Rondonia, Acre, Amazonas and Roraima, all located in the north and northeast regions.

Asked for comment, Eletrobras said the matter is still under evaluation by its board and that there is no decision yet about the destiny of the power distribution companies it controls.

Eletrobras shares were up 4.3 percent on BMFBovespa exchange mid-day on Wednesday. (Reporting by Leonardo Goy; Writing by Guillermo Parra-Bernal and Marcelo Teixeira, Editing by Chizu Nomiyama)

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