Brazil Said to Offer Subsidized Loans to Power Distributors

Brazil plans to offer subsidized loans for electricity distributors whose cash flow has been reduced by price cuts and higher costs, said two people with knowledge of the measure.

The National Treasury will tap the so-called CDE industry development account to provide cheap funding for distributors, said the people, who asked not to be named because the plan hasn’t been made public. Energy Ministry press department officials didn’t respond to e-mailed and telephone requests for comment on the plan.

Energy Minister Edison Lobao told reporters Feb. 27 that the National Treasury planned to give companies financial assistance after the government lowered prices to contain inflation. Reservoir levels at a decade low are curtailing the use of cheap hydro power and forcing Brazil to fire up costly thermal plants to avert an energy shortfall.

Brazilian electricity distributors have lost 5 billion reais ($2.55 billion) since October after power prices surged, wiping out gains anticipated from a government initiative to cut energy expenses, according to an estimate from the Distributors Association, known as Abradee.

To contact the reporters on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net; Anna Edgerton in Miami at aedgerton@bloomberg.net

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

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