Brazil’s government may come to Celpa’s rescue

Speaking exclusively to Reuters, two senior government officials said the federal government may intervene in debt-ridden electricity distributor Celpa, which filed for bankruptcy protection earlier this week.

This latest development is seen as an indication that the financial woes of Celpa, a power distributor in the northern state of Para, are expected to worsen.

According to the Reuters report, a federal intervention in Celpa, which is part of Grupo Rede Energia, is likely to be more effective than a bailout engineered by state-controlled power holding company Eletrobras.

One of the unnamed sources said another solution to Celpa’s problems, which include a potential default on 2bn reais ($1.17bn) of debt, could be revoking its license.

Aneel, the country’s electricity industry regulator, will make the final decision on whether the situation at Celpa merits a government-engineered intervention, reports Reuters.

Such a move could be similar to the intervention at power distribution company Cemar, which serves the northern state of Maranhao, which happened close to ten years ago.

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