September 29, 2017 / 12:56 AM / a year ago

Brazil's Eletrobras to auction indebted distributors for 30 cents - sources

RIO DE JANEIRO, Sept 28 (Reuters) - State-run Eletrobras , Brazil’s largest power utility holding company, will auction its inefficient and heavily indebted electricity distribution subsidiaries for a symbolic 1 real ($0.31) to the buyers who offer to charge the lowest rates to consumers, sources said on Thursday.

The two sources with direct knowledge of the matter, but who requested anonymity because they were not authorized to speak publicly, said this would allow the buyers to invest more to improve the service of the companies located in the North and Northeast of Brazil.

Brazil’s government plans to sell the six distribution companies in the first quarter of 2018 before it privatizes Eletrobras.

“The idea is to sell the distributors to whoever offers to charge the lowest rates, because the consumer has nothing to do with the company’s problems, and sell for 1 real. Otherwise, nobody would be interested,” one of the sources said.

The companies of the Eletrobras group owe state-run oil company Petrobras S.A. about 10 billion reais ($3.1 billion), mainly for fuel supplies for thermal power generation.

Eletrobras said it would not comment on the sales until shareholders have decided on a formula for the company’s privatization.

On Wednesday, Chief Executive Wilson Ferreira Jr said Eletrobras will start selling stakes in dozens of ventures such as wind farms and transmission lines in October. ($1 = 3.1822 reais) (Reporting by Rodrigo Viga Gaier; Writing by Anthony Boadle; Editing by Sandra Maler)

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