(Adds context, attempt to contact ministry, major companies potentially involved)
By Rodrigo Viga Gaier and Luciano Costa
RIO DE JANEIRO/SAO PAULO, May 14 (Reuters) - Brazil’s government is considering 12 billion reais ($2.06 billion) in emergency loans to help power utilities weather a financial crunch brought on by the new coronavirus pandemic, three people with knowledge of the matter told Reuters.
Power distribution firms have been asking for an aid package as electricity demand falls amid the health crisis and more consumers default on utility payments. Industry executives estimate they need 15 billion reais to 17 billion reais in order to meet their obligations to power generation and transmission companies.
The government has acknowledged talks about aid for the sector with state banks BNDES, Banco do Brasil SA and Caixa Economica Federal as well as private banks Itau Unibanco and Banco Bradesco SA. But it has not provided a potential value of the aid package.
Brazil’s Mines and Energy Ministry, which oversees regulation of the sector, did not immediately respond to request for comment.
The proposed loans would be repaid over a period of 60 months, the sources said. Half of the interest costs would be taken on by the utilities while the rest would be passed to customers, one of the people said.
The biggest investors in Brazil’s energy distribution sector include China’s State Grid, which owns CPFL Energia, Italy’s Enel and Spain’s Iberdrola, through its ownership of Neoenergia. Major players in the sector also include Energisa SA, Equatorial Energia SA and state-owned Cemig.
$1 = 5.8127 reais Reporting by Rodrigo Viga Gaier and Luciano Costa; Writing by Jake Spring; Editing by Chris Reese and Alistair Bell