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Brazil Utilities Plan Won’t Change, Government Official Says

The Brazilian government isn’t considering changing its utilities concession renewal plan, a government official who participated in the plan said.

The country’s government believes the plan allows companies sufficient revenues to pay for maintenance, the official who couldn’t be named because of internal policy, said in Brasilia.

Today, Centrais Eletricas Brasileiras SA (ELET6), known as Eletrobras, lost 8.2 percent in trading, while Cia Energetica de Sao Paulo (CESP6), or Cesp, fell 5.8 percent and Cia de Transmissao de Energia Eletrica Paulista, known as Cteep, lost 4.2 percent.

The government proposed paying generation and transmission companies about 19 billion reais ($9.4 billion) for the renewal of concessions due to end between 2015 and 2017.

Eletrobras was expecting compensation of almost 30 billion reais for their assets, said president Jose da Costa Carvalho Neto on Oct. 31, one day before the company knew that the government proposed to pay 14 billion reais for them to accept the new terms.

The government used a globally accepted method to calculate the compensation based on the current value of assets and depreciation, the official said.

The government expects that the market will keep investing in electric power generation in Brazil because the country’s economic boom means that more dams will be needed, the official said.

To contact the reporter on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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