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.

For more Latin America news.

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