The sell-off of a controlling interest in the Brazilian integrated power utility Copel was postponed for second time last night after the auction failed to produce any candidates willing to post the necessary deposit. The state government of Parana said that it had postponed it indefinitely “due to the momentary absence of interested investors in the privatisation process of Copel”, according to an official release.

The sale of a 40.5 per cent controlling stake was originally scheduled for 31 October but no companies had lodged a deposit ahead of the rescheduled 12 November date.

Tractebel, which was the last remaining foreign investor to have expressed a firm interest in Copel, withdrew last week arguing that the asking price of R$5.07bn ($1.94bn) was too high.

GP Investimentos, a local private equity fund, and a consortium consisting of Companhia Vale de Rio Doce (CVRD) and Votorantim, two Brazilian conglomerates, also pulled out.

“In a way, it has been cancelled. There is no [new] date, there is nothing,” said Marcos Severine, equity analyst manager at Sudameris in Sao Paulo. “Privatisation now looks impossible this year. The risk that it will not happen at all is great,” he said.

The privatisation of Copel, a profit-making company that generates 7 per cent of the country’s electricity, is a test of investors’ appetite as Brazil is struggling to overcome a severe shortage of energy. A few months ago, at least eight foreign groups had registered an interest in Copel but they pulled out of the race one after the other, citing lingering concern over regulations of the Brazilian energy sector.

Copel was considered by analysts to be the jewel in the crown of the Brazilian electricity sector. Despite the power crisis affecting the country and ongoing turmoil in the regulatory structure, Copel remained an attraction due to its surplus electricity production and the fact that it operates outside the region affected by rationing.

If the sale fails to proceed it will please local opposition who fear job losses and electricity price hikes.