Brazilian government expects to announce power companies bailout in May- ministry

SAO PAULO, April 20 (Reuters) – The Brazilian government expects to announce details of a bailout to power companies next month, Mines and Energy Ministry Secretary Rodrigo Limp told Reuters on Monday.

While industry lobby groups have mentioned the power companies would need up to 17 billion reais ($3.2 billion) in credit, Limp said there is no final decision about the size of the bailout needed.

A presidential decree earlier this month has allowed the pass-through of the credit cost to consumers in the tariff. Limp said consumers would pay over the long term, and the cost would be deferred up to five years.

Private sector and state-controlled banks are discussing the details of the credit, Limp said.

In addition to the drop in demand for electricity, power companies are complaining of potential higher delinquency rates after power regulator Aneel forbade service cuts for three months to residential and essential services consumers who do not pay their bills.

The Mines and Energy Ministry expects to have details of the power companies bailout next month.

In addition to the credit, power companies can receive cash from public funds aimed at research and development in the industry. Limp said the ministry is working to avoid distributors’ canceling energy contracts with generators alleging the pandemic is a force majeure.

Among investors that own or have stakes in distribution companies in Brazil are Spain’s Iberdrola, controlling shareholder in Neoenergia, Italy’s Enel Spa and State Grid Corp of China, controlling shareholder in CPFL Energia SA. ($1 = 5.3017 reais) (Reporting by Tatiana Bautzer Editing by Leslie Adler)

Source: Read Full Article