(Adds comments from former minister and executive, context)
By Rodrigo Viga Gaier and Luciano Costa
RIO DE JANEIRO/SAO PAULO, May 23 (Reuters) - Shares of Brazil’s state-run power company Eletrobras sank on Wednesday after a Congressional decision likely torpedoed for the near future a planned privatization of the company and some of its subsidiaries.
Shares of Centrais Elétricas Brasileiras SA, as the company is formally known, lost 10 percent in morning trading in São Paulo, dropping to their lowest level since August, as investors’ hopes for the company’s privatization or the sale of some of its money-losing subsidiaries faded.
Late on Tuesday, the head of Brazil’s lower house, Rodrigo Maia, said the chamber would not vote on a presidential decree outlining rules for the sale of state-controlled power companies. He asked President Michel Temer to send a draft bill instead, which would likely take more time to go through both houses of Congress.
“It becomes very hard now to head in the direction of a privatization,” former energy minister Fernando Coelho told Reuters on the sidelines of a power industry seminar in Rio de Janeiro on Wednesday.
With a general election scheduled for October, Congress likely will not have enough time to evaluate and vote on a new draft bill.
“Congress was absolutely irresponsible,” Elena Landau, former chairwoman of Eletrobras, told reporters at the power event.
Temer’s government announced plans to sell a controlling stake in Eletrobras last August.
The presidential decree would have helped clear some of the debt of several power distribution subsidiaries in the north of Brazil that Eletrobras wanted to sell.
It would have allowed the firm to receive around 8 billion reais ($2.2 billion) in credits due to those subsidiaries, and was also set to change some power generation policies to give more assurances to investors willing to participate in the sale of Eletrobras.
Eletrobras is the largest power generator in Brazil and controls dozens of subsidiaries in all regions. Control of it is a politically sensitive topic, as many politicians have had the power to nominate directors for some of its branches.
$1 = 3.6457 reais Reporting by Rodrigo Viga Gaier and Luciano Costa, Additional reporting and writing by Marcelo Teixeira; Editing by Chizu Nomiyama and Rosalba O'Brien