Chamber approves Eletrobras MP; check all points

The Chamber of Deputies approved this Monday (21), by 258 votes to 136, the MP (Provisional Measure) that allows the capitalization of Eletrobras – a state-owned company linked to the MME (Ministry of Mines and Energy) and which accounts for 30% of energy generated in Brazil. 

The text was hurriedly analyzed by parliamentarians, because if it was not voted on by Tuesday (22) it would expire. Despite having the force of their own law, all provisional measures must be approved by the National Congress within 120 days to avoid losing their validity.

Measure had already been approved by the Chamber in May of this year, but it was changed by the senators and had to be voted on again by the deputies. With approval, the document was forwarded to presidential sanction.

The MP authorizes the Union the power to grant, for a period of 30 years, new concessions for electricity generation under the ownership or control of Eletrobras. The privatization will be carried out in the form of an increase in share capital, through the public subscription of common shares.

Despite losing much of its control over the state-owned company, the Federal Government will still have 45% control of the company and the right to a special class action (golden share) – which guarantees veto power over assembly decisions, in order to prevent just one shareholder from holding more than 10% of the company's capital.

The Union's forecast is to privatize Eletrobras by February next year, after completing the necessary procedures, including studies carried out by BNDES (National Bank for Economic and Social Development).

Changes

To obtain approval of the MP from the Senate, rapporteur Elmar Nascimento (DEM-BA) needed to make specific changes to the original document. The main change was the removal of the section that provided for the mandatory contracting of thermoelectric plants before the start of the state-owned company's capitalization process.

This was the government's third attempt to privatize Eletrobras in recent years. The first was in January 2018, through PL 9463/18, which was discussed in a special committee, but was not voted on. The second time was in November 2019, with PL 5877/19.

Check out the topics in the Eletrobras MP:

• Privatization model: The state-owned company will be privatized through capitalization and the Union will have only 45% of control of the company. The company's share capital will be increased through a public offering of shares.
• Special class: The Union will have special class preferred shares and each shareholder will not have voting power exceeding 10%.
• New state-owned: It was decided that a new state-owned company will be created to manage Eletronuclear and Itaipu Binacional, which will not be privatized.
• Current workers: The text allows employees dismissed in the company's restructuring to choose, within six months of dismissal, to purchase shares with the money from the termination. It was also decided that the Union will be able to take advantage of workers in other companies in the sector that remain under its control.
• Proinfra: The text establishes the need to extend contracts for plants built through Proinfa (Incentive Program for Alternative Electricity Sources) by 20 years.
• Gas thermal: The document determines the contracting of thermoelectric plants powered by natural gas to supply 8 MW of energy for 15 years in locations that do not have natural gas transport infrastructure.
• PCHs: There will be a market reserve for contracting PCHs (Small Hydroelectric Power Plants) and the rule applies to auctions held until 2026.
• Tucuruí Line: The Union will be able to authorize the construction of the Tucuruí Line – a transmission system that would connect Roraima to the national electrical system, without the need for environmental licenses from Ibama (Brazilian Institute of the Environment and Renewable Natural Resources) and Funai (National Indian Foundation).
• Environment: The Federal Government must create a plan to recover hydroelectric plant reservoirs, improve the navigability of the Tietê-Paraná waterway and reduce energy generation costs in the Legal Amazon, in addition to improving the navigability conditions of the Madeira River and the Tocantins River.