Ceal privatization auction fails

The deepening financial crisis and the failed attempt to privatize Alagoas state power utility Ceal has cast doubt on the future of Brazil`s privatization programme. Only one consortium signed up for the auction of Ceal in early December, but failed to submit a bid.

A currency devaluation in early January has prompted fresh fears among investors of a deep recession in Brazil and other developing countries and caused the government to abandon the currency`s peg against the US dollar. An increase in interest rates has been implemented by the Brazilian Central Bank to calm investors.

Other utilities due to come under the hammer in 1999 include Banespa, Cesp, Banestado and Furnas. A new auction for Ceal is also likely take place this year. The government is expecting $18m of revenue from sales in 1999.

The consortium which signed up for Ceal – led by power utility Companhia de Forca e Luz Cataguazes-Leopoldina — made the guarantee deposit but when the auction opened no bid was made. Ceal`s privatization involves the sale of 87.37 per cent of its capital. The minimum price was established at R$313.15m ($213m).

•Tractebel has increased its holding in Brazilian generating company Gerasul through a share purchase on the Brazil stock exchange. Tractebel now owns 68 per cent of Gerasul`s capital, representing 77 per cent of the voting rights. Tractebel bought a 42 per cent stake in Gerasul in September 1998.