BRASILIA/SAO PAULO, June 1 (Reuters) - Brazilian senators approved late on Tuesday legislation providing financial help to several power distribution firms controlled by holding company Eletrobras, in a move that will cost the government and consumers billions of reais.
The bill, which now heads for Presidential approval, should also benefit Petroleo Brasileiro SA since it will assist power companies on late payments for fuel provided by the oil company for electricity generation.
The legislation was initially proposed by now suspended President Dilma Rousseff and originally had the main objective of extending operating licenses for a handful of power distributors in northern Brazil.
But it received many additions until the final vote on Tuesday, including several provisions aimed at improving the financial health of those companies.
Many of the additions were proposed by congressmen with roots in the areas where the companies operate, such as former Energy minister Edson Lobão, from the same PMDB party from interim President Michel Temer.
It is unclear if Temer, who has announced a series of measures to reduce government spending, will veto parts of the law.
The bill changes the way the government calculates how much money it needs to transfer to these companies in subsidies linked to more expensive thermal generation, since many of them are not linked to the national grid and can not use cheaper hydro generation. Subsidies will potentially increase.
Companies that had to rely heavily on thermal generation in the last couple of years, due to strong droughts, accumulated heavy bills from Petrobras and its fuel distribution subsidiary BR Distribuidora.
Eletrobras estimates that its subsidiaries owe Petrobras close to 10 billion reais ($3.58 billion) in fuel.
The approved legislation also gives additional time for northern power distributors to adjust to quality standards required by Brazil’s electricity regulator Aneel, potentially freeing up cash that otherwise the firms would have to invest in infrastructure.
Another addition gave Eletrobras up to 2026 to repay some federal funds it used to expand power transmission, an amount that some consultancies put at 7 billion reais.
Congressman against the bill said it will reward inefficiency and cost the government money it currently does not have, as Brazil estimates a shortfall of 170 billion reais in 2016.
$1 = 3.58 reais Reporting by Marcelo Teixeira, Luciano Costa and Eduardo Simões; Editing by Christian Schmollinger