November 5, 2019 / 10:38 AM / 15 days ago

Eletrobras shares rise as Bolsonaro poised to privatize

FILE PHOTO: The logo of Brazil's power company Eletrobras is seen in Rio de Janeiro, Brazil January 3, 2019. REUTERS/Pilar Olivares

BRASILIA (Reuters) - Shares in Brazilian power company Eletrobras SA jumped more than 4% on Tuesday on expectations that President Jair Bolsonaro will sign off on a plan to end state control of the company, one of his biggest privatizations yet.

In a late Monday filing, the company said Bolsonaro would sign off on the plan on Tuesday, adding there would be several legislative hurdles before the proposed privatization of Centrais Eletricas Brasileiras SA, as it is formally known.

Brazil’s Mines and Energy Minister Bento Albuquerque told reporters on Tuedsay that Eletrobras would likely be privatized in the second half of 2020.

The operation, if successful, would be the boldest move so far in Bolsonaro’s campaign to roll back state influence in Latin America’s largest economy, an effort championed by Economy Minister Paulo Guedes.

Eletrobras, with a market capitalization of more than $13 billion, has long stood astride Brazil’s power industry, with state-level subsidiaries often packed with political appointees.

In August, the president gave the green light to draft a plan ceding government control of Eletrobras by selling new shares to the private sector, diluting the government’s stake until it no longer controls the board of directors.

The government has previously estimated that such an operation could raise some 12 billion reais ($3 billion) for the company, which could then pay the government to renew several concessions for older hydroeletric dams with better conditions.

The proposal, which was first debated under Bolsonaro’s predecessor, is expected to involve a separation of operations considered strategic by the government, such as nuclear power unit Eletronuclear.

Additional reporting by Marcelo Teixeira; Writing by Gabriel Stargardter; Editing by Brad Haynes, Louise Heavens and David Gregoro

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