BRASILIA/SAO PAULO, March 27 (Reuters) - State-led Eletrobras, Brazil’s largest power utility holding company, posted on Wednesday a net loss of 6.88 billion reais ($3.42 billion) for last year that it attributed to the impact of a government-sponsored plan to cut electricity rates.
That was a sharp reverse from 2011, when it turned a net profit of 3.73 billion reais.
The company, which is formally called Centrais Elétricas Brasileiras SA, said in a securities filing that it had a net loss of 10.5 billion reais in the fourth quarter of 2012, compared to 557 million reais in profit in the same quarter of 2011.
“The large loss must be seen as the direct result of the effects of Law 12,783,” the company said, referring to the law that set conditions for the renewal of electricity concessions aimed at lowering Brazil’s high energy costs.
“This year’s numbers were severely impacted by the effect of the law on our assets,” the company said.
Eletrobras had been expected to earn 4.1 billion reais in profit for the full year, according to consensus estimates by 19 analysts compiled by Thomson Reuters. Net income for the fourth quarter was expected at 1 billion reais.
Eletrobras unit Companhia Hidrelétrica do São Francisco (Chesf) reported a consolidated loss of 5.3 billion reais ($2.63 billion) for 2012 due to accounting adjustments resulting from the renewal of the concessions, the company said earlier on Wednesday.
The 2012 results come as the company is scheduled to announce a restructuring plan to adjust to a revenue loss of almost 9 billion reais triggered by the government’s decision in August to tie the renewal of expiring power licenses to a reduction in rates for factories and households.
The company will announce the restructuring during a press conference scheduled for Thursday to discuss its 2012 results.
One possibility under consideration is for Eletrobras to sell money-losing electricity distribution utilities that the federal government made the company take on in recent years.