Petrobras May Cover Almost Half Utilities’ Needs: Trader

Petroleo Brasileiro SA (PETR3) probably has enough surplus electricity to meet almost half the needs of Brazilian distributors in an auction scheduled for April 30, according to a power trading company.

Petrobras, as the state-run oil producer is known, has 1.4 gigawatts available from its thermoelectric plants to sell to distributors, Bolt Comercializadora Chief Executive Officer Erico Evaristo said. State-owned generators Centrais Eletricas Brasileiras SA (ELET3) and CPFL Energia SA could also offer power to help reduce utilities’ 3.2-gigawatt exposure to record-high spot market prices, he said by telephone from Sao Paulo.

“CPFL has about 345 megawatts available and I expect Eletrobras units to also have some,” Evaristo said. “The state-owned companies may not have much option but to sell at the government-set ceiling prices.”

The most severe drought in at least four decades has reduced southeastern hydroelectric dam levels to the lowest since 2001, when Brazil last rationed power. That’s forcing the country to rely more on higher-cost thermoelectric generation, pushing up spot power costs.

Distributors such as Light SA (LIGT3), Cia Energetica de Minas Gerais and Eletropaulo Metropolitana Eletricidade de Sao Paulo SA have less power than needed to meet contract obligations.

Petrobras’s press office in Rio de Janeiro didn’t return requests for comment made by e-mail and phone.

Bank Loans

Brazil’s government announced yesterday that 11 private banks and two state-controlled institutions will take part in a 11.2 billion-real ($5.1 billion) loan to help utilities. The loan will be taken by Brazil’s Electric Energy Trading Board, which will pass the money to distributors.

JPMorgan Chase (JPM) & Co., Citigroup Inc., HSBC Holdings Plc (HSBA), Bank of America Corp., Goldman Sachs Group Inc. (GS), Credit Suisse Group AG, Grupo BTG Pactual (BBTG11), Banco Bradesco SA (BBD), Itau Unibanco Holding SA (ITUB) and state-controlled Banco do Brasil SA are among the banks involved in the pool, the country’s Finance Ministry said in an e-mailed statement.

Details on the loans are to be negotiated by the banks and the trading board, known as CCEE, until April 28. The cost will be passed to customers starting next year, according to an electric regulator’s decision.

The government announced the loans on March 13 as part of a plan to aid distribution utilities, but the amount of money was increased to 11.2 billion from 8 billion reais to lessen the Treasury component of the aid, electric regulator head Romeu Rufino told reporters on April 8.

Loans would need to be higher than 11.2 billion reais if the April power auction fails to reduce exposure, Evaristo said.

“In the first quarter, the thermo cost reached 10 billion reais and we expect the rain situation will not improve in the rest of the year,” he said.

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

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

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