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Brazil regulator: Enel can sell Sao Paulo's power contract in order to avoid forfeiture

Aneel, head of Brazil's energy regulator, said that a unit of Italy's Enel, located in 'Sao Paulo and at risk of losing its contract to distribute electricity because of 'alleged poor performance', could sell it to another company to avoid financial losses. The Brazilian regulator began an administrative procedure earlier this week in order to potentially revoke Enel Sao Paulo’s concession after identifying “structural failures” in the provisioning of services following recent extreme weather events.

Brazil's Energy minister Alexandre Silveira stated on Wednesday that "a negotiated exit" is still possible if the regulator recommends that the federal government cancel?Enel?s contract. However, he did not give details as to what that would mean.

Aneel’s head, Sandoval Feitosa, told reporters Thursday that selling Enel Sao Paulo’s concession is the only solution he can imagine. He cited a case from 2022 in Goias, where Enel had sold its concession to Equatorial.

He added that "the negotiated solution, mentioned by the Minister, which I believe is also an option, will have to be structured and approved by Aneel."

Enel said recently that it did not plan to abandon the concession.

During the administrative process, Enel has 30 days to make its defense before the regulator decides whether or not to recommend the revocation contract in Sao Paulo.

Feitosa didn't?commit to an?eventual timeline?for resolving this case but Aneel said they would work towards a resolution "as soon as possible." (Reporting and writing by Leticia Fukuchima, Editing by Cynthia Osterman).

(source: Reuters)