Brazil’s Cesp Jumps on Speculation Concessions May Be Renewed

Cia. Energetica de Sao Paulo, Brazil’s third-largest electricity generator, rose to an almost 10-month high in Sao Paulo trading on speculation the government will renew hydroelectric dam concessions that expire over the next six years.

The preferred shares of Cesp, as the company controlled by the government of Sao Paulo state is known, rose 1.5 percent to 20.25 reais at 3:48 p.m. in New York. They earlier reached 20.60 reais, the highest since Sept. 8. The preferred shares are the company’s most-traded class of stock.

Cesp’s planned sale of the government’s stake has been delayed on concern the loss of the concessions would leave the company with few cash-generating assets, said Julia Costa, an energy analyst with Agora CTVM in Rio de Janeiro.

“The trading story on Cesp is all about speculation on the concessions,” Costa said in a telephone interview. “There’s a good chance the concessions will be renewed as they are so big that it might be hard for the government to auction them all at once.”

Most of Cesp’s major dams will lose their licenses to operate by 2015 and become property of Brazil’s federal government. Talks are being held after investors and the Sao Paulo state government asked Energy Minister Edison Lobao to let Cesp renew the concessions.

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net

To contact the editor responsible for this story: Dale Crofts in Buenos Aires at dcrofts@bloomberg.net

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