SAO PAULO (Reuters) - A 16 billion-real ($2.93 billion) loan designed by Brazilian government to support power distribution companies cope with the coronavirus crisis is not enough to compensate all losses triggered by the pandemic, an industry association said on Tuesday.
The so-called ‘Conta Covid’ operation to boost utility companies’ liquidity involves several banks led by Brazilian Development Bank BNDES and solves only immediate financial problems, according to Marcos Madureira, head of Brazilian association electric energy distribution Abradee.
He noted the lower energy consumption triggered by social distancing measures to curb the outbreak will negatively impact the revenue of power distribution companies.
“This leads to an Ebitda (earnings before interest, taxes, depreciation and amortization) reduction for companies as they will have a revenue lower than the expected for the same service while costs will not be reduced,” Madureira said.
Other mid-term effects are also expected such as higher losses with irregular connection and delinquency, which are unlikely to be solved even after the pandemic ends, he added.
Power distribution companies required local regulator Aneel to analyze the economic and financial balance of their concessions, which may allow them to raise tariffs if decided that operations were structurally affected.
Reporting by Luciano Costa; Writing by Gabriela Mello; Editing by David Gregorio