June 23, 2016 / 1:32 PM / 2 years ago

Brazil issues decree to inject 3.5 bln reais at Eletrobras

BRASILIA, June 23 (Reuters) - Brazil’s government on Thursday issued a decree formalizing the transfer of up to 3.5 billion reais ($1.05 billion) in federal funds by 2017 to state-run electricity holding company Centrais Eletricas Brasileiras SA, known as Eletrobras.

The decree is effective immediately but requires Congress’ approval. It also strips Eletrobras of the management of the RGR fund for rural electrification and the CDE power subsidy funds, starting next year.

Brazil first announced the capital injection on Wednesday, when it also tapped the leader of one of the country’s largest private electricity companies to run Eletrobras.

Wilson Ferreira Jr., currently CEO of CPFL Energia SA , will replace José da Costa Neto as Eletrobras CEO.

Eletrobras shares closed 6.8 percent higher on the news and the announcement of the capital injection on Wednesday.

The appointment of Ferreira signals a shift in how the company’s management is selected. Previous heads of Eletrobras have traditionally been political appointments.

$1 = 3.3454 Brazilian reais Reporting by Luciano Costa; Writing by Silvio Cascione; Editing by Daniel Flynn and Lisa Von Ahn

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