July 2, 2018 / 8:56 PM / a year ago

Brazilian govt keeps distribution companies auction despite Supreme Court ruling

SAO PAULO, July 2 (Reuters) - The auction of six power distribution companies by state-controlled holding Centrais Elétricas Brasileiras will take place on July 26 as scheduled, a senior government official told Reuters on Monday.

Marcio Felix, deputy Mines and Energy minister, said there were “different interpretations” of a ruling by Supreme Court Justice Ricardo Lewandowski last week stating that Congress must approve the sale of all state-controlled companies.

Felix said the government does not think it should affect the auction organized by Eletrobras, as the company is known.

The exception is one of Eletrobras’ distribution companies in the state of Alagoas, Felix said, since this company was the target of a separate injunction suspending the sale by the same Supreme Court justice. That decision was in response to a 2016 request by unions representing bank workers to knock down a revised law governing state-controlled companies that was passed by Congress that year.

Mines and Energy minister Wellington Moreira Franco told journalists last week the government will appeal Lewandowski’s injunction.

Eletrobras said in a securities filing last week that the company was analyzing the effect of Lewandowski’s ruling.

The company has a board meeting scheduled for July 30 to consider the potential liquidation of the money-losing companies if Eletrobras cannot sell them, a move Felix said the government wanted to avoid.

Preferential shares in Eletrobras, its most liquid class of stock, rose 8.34 percent to 14.68 reais on Monday, as the benchmark Bovespa index rose 0.1 percent. (Reporting by Luciano Costa Writing by Tatiana Bautzer)

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