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Brazil

Nearly 75% of the voting capital, corresponding to about 30% of the total capital of Eletropaulo Metropolina was sold at auction for about US$1.8 billion on April 15. Eletropaulo Metropolina was the largest of the two distribution networks of Eletropaulo which, in turn, was the largest distributor of electricity in Latin America. The participation was acquired by Light, already a distributor of electricity in Rio de Janeiro, controlled by a consortium formed by Companhia Siderúgica Nacional, the American companies Huston and AES and the French company EDF.

At least 16 other electricity companies will be privatized in 1998. These are subject to the new rules issued in view of distribution problems occurring in Rio de Janeiro in January 1998. The Provisional Measure 1531 was re-issued on April 2, extending the monitoring and regulatory powers and duties of ANEEL, the National Electric Energy Agency, and authorizing the re-organization of Eletrobrás and all its subsidiaries throughout Brazil. Under Provisional Measure 1531, the winning bid in privatizations of the sector will be the one combining the lowest tariff, the highest concession price and the best technical proposal.

Prevailing competition rules are contained in ANEEL's Ruling 94 of March 30 1998 as follows:

  • each generating network cannot hold more than 20% of the national installed generating capacity; 25% of the installed capacity in the south, south-east and centre-west areas; and 35% of the installed generating capacity in the north and north-east of Brazil;
  • each distribution network cannot hold more than 20% of the national distribution market; 25% of the distribution market in the south, south-east and centre-west areas; and 35% of the distribution market in the north and north-east of Brazil;
  • a sole network acting both as generator and distributor of electricity cannot have an arithmetical sum of its participation in the national installed generating capacity and its participation in the national distribution market which exceeds 30%.

Eliana Maria Filippozzi

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