Brazilian court blocks funds for Cedae privatisation
Published September 7th, 2017
The Brazilian supreme court has blocked plans for BNDES and other public banks to acquire shares in Cedae, a process which was central to the federal government’s aim of privatising the Rio de Janeiro (RJ) state water operator.
Cedae’s shares would have guaranteed a BRL3.5 billion ($1.1 billion) loan to RJ to allow the state government to pay employees and creditors.
Trade union opponents of the privatisation hailed the decision as a victory, but a BNDES spokesman told GWI that “it will have no impact on the ongoing process” of drafting a consultancy report into how best to privatise Cedae.
The spokesman said that RJ state can seek private financing and, “though the terms will be less favourable, there is agreement by the federal treasury to provide guarantees.”
The federal government could repay private sector loans using the ‘canon’ from an eventual Cedae sub-concession, one industry source suggested to GWI.