Brazil Senate passes bill to help troubled Eletrobras companies

martes 31 de mayo de 2016 23:52 GYT

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.   Continuación...