Brazil energy asset sales meet delays

In a ruling that could impede the privatisation of Eletrobras, Brazilian Supreme Court Justice Ricardo Lewandowski on Wednesday said that Congress must sanction the sale of stakes in government-owned companies, international media reported.

President Michel Temer’s administration initiated the sale of Eletrobras stakes and of six of its distribution subsidiaries for an estimated USD 3.2 billion. About 70 transmission- and wind-related special purpose companies will also be put on sale.

All the sales were expected to be completed before the end of 2018; however, given the upcoming Supreme Court recess, an appeal to the new ruling could take months.

In another blow, ahead of its own upcoming recess, Congress’ lower house on Tuesday delayed votes on legislative amendments that would allow the Eletrobras auctions to go through at the end of July.

The recess could also interfere with Petrobras’ transfer-of-rights pre-salt acreage auctions, tentatively scheduled to take place on November 29. A draft bill to allow the sales was passed by the lower house last week, but still requires approval from the Senate and President Temer.

“Once approved, the change should let Petrobras make around USD 28 billion,” Minister of Mines and Energy Wellington Moreira Franco said in a speech yesterday.