Cia. Paranaense de Energia plunged the most on record after giving in to the Parana state governor’s demands that it suspend an electricity rate increase amid growing nationwide protests over inflation and corruption.
Copel, as the utility is also known, sank 17 percent to 26.21 reais at the close of trading in Sao Paulo, the steepest drop since shares started trading in January 1997. It was the worst performance on the Ibovespa stock benchmark, which retreated 2.4 percent.
Richa said on his Facebook page that he demanded that the Curitiba-based company suspend a rate increase of as much as 15 percent scheduled for next week while he discusses it with the Brazilian regulator Aneel. The state of Parana owns 31.1 percent of Copel, according to the Curitiba-based company. The utility agreed to halt the rate adjustment and board members will meet with shareholders and government officials on June 24, it said in an e-mailed response to questions.
“The news is extremely negative as it underscores political interference and may bring heavy losses to Copel shareholders,” Marcelo Britto and Kaique Vasconcellos, analysts at Citigroup Inc., wrote in a note to clients today.
Protesters across Brazil have demanded free public transport, better public services and a crackdown on corruption. Last night, about 3,500 people participated in a protest in Curitiba, the capital of Parana, according to police.
Copel led declines today on the BM&FBovespa Public Utilities index, which slumped 4.9 percent.
Suspending the rate increase could “definitely” have a negative impact on Copel’s revenue, Ari Santos, an equity trading manager in Sao Paulo at H. Commcor, said in a telephone interview. “People are probably scared that something like this spreads to other companies as well, so that is one of the things affecting the sector’s stocks.”
Copel’s profit trailed analysts’ estimates in four of the past five years, data compiled by Bloomberg show. The utility’s adjusted net income declined 40 percent to 700.7 million reais ($312 million) in 2012.