(Adds context, attempts to contact ministries, potentially large companies involved)
By Rodrigo Viga Gaier and Luciano Costa
RIO DE JANEIRO / SAO PAULO, May 14 (Reuters) – The Brazilian government is considering 12 billion reais ($ 2.06 billion) in emergency loans to help power companies overcome the financial crisis caused by the new coronavirus pandemic, three people who are aware of this problem . told Reuters.
Electricity distribution companies have requested assistance packages because electricity demand has fallen amid a health crisis and more and more consumers have failed to pay for utility payments. Industry executives estimate they need 15 billion reais to 17 billion reais to fulfill their obligations to power plants and transmission companies.
The government has acknowledged talks on aid to the sector with state banks BNDES, Banco do Brasil SA and Caixa Economica Federal and private banks Itau Unibanco and Banco Bradesco SA. But it has not yet provided the potential value of the aid package.
The Brazilian Ministry of Mines and Energy, which oversees the regulation of the sector, did not immediately respond to requests for comment.
The proposed loan will be repaid for 60 months, said the source. Half of the interest costs will be borne by the utility while the rest will be passed on to the customer, said one person.
The largest investors in Brazil’s energy distribution sector include the Chinese State Grid, which owns CPFL Energia, Enel Italia and Iberdrola Spain, through its ownership in Neoenergia. The main players in this sector also include Energisa SA, Equatorial Energia SA and state-owned Cemig.
$ 1 = 5.8127 reais
Reporting by Rodrigo Viga Gaier and Luciano Costa; Write by
Jake Spring; Editing by Chris Reese and Alistair Bell