SAO PAULO (Reuters) – Brazilian state-run power company Eletrobras has reported third-quarter net income of 965 million reais ($175.37 million), down 66% year-on-year, hit mainly by provisions relating to ongoing legal action.
The lawsuits relate to a compulsory energy loan program, which required industrial energy customers to provide money to pay for Brazil’s electricity sector.
The government promised to repay the companies but this has been repeatedly postponed leading to legal action.
Eletrobras, or Centrais Eletricas Brasileiras SA, as the company is formally known, said adjustments in provisions for contingencies totalled 9.43 billion reais in the third quarter. This included a 5.25 billion reais reclassification to “probable” from “remote” for the so-called “compulsory loan on electricity” lawsuits, it said.
Eletrobras, which is expected to be privatized in 2022, said its quarterly earnings before interest, taxes, depreciation and amortization (EBITDA) reached 5.6 billion reais, up 4% from a year earlier.
The company said the results were positively impacted by a strong operating performance especially in the transmission segment.
Brazil has been facing its worst drought crisis in about 90 years, which has severely affected hydropower generation and led the country to rely more on costly thermoelectric power plants, while also making electricity more expensive for consumers.
Eletrobras net operating revenue totalled 9.96 billion reais in the third quarter, an increase of 50% from the same period of 2020, positively influenced by effects from a periodic tariff review on its transmission business.
($1 = 5.5028 reais)
(Reporting by Gabriel Araujo. Editing by Jane Merriman)
