Brazil‘s government is facing legal action from foreign investors in the country’s electricity industry, as interventionist moves to cut power tariffs are deemed to be having a significantly negative effect.
Government intervention has hit Brazil’s biggest electricity generator Eletrobras, whose stock plunged to a 17-year low last week.
Foreign creditors of another group, Rede Energia, which distributes electricity in seven states, are fighting unprecedented government intervention in the company that they say is forcing the fire sale of its main assets.
The government is facing a balancing act between trying to stimulate Brazil’s flagging economy and improve the country’s competitiveness while attracting an estimated $1,000bn needed for planned infrastructure investments.
President Dilma Rousseff wants to cut Brazil’s electricity costs, which are among the highest in the world, by as much as 28 per cent for national industry.
For more Latin American power news