Eletrobras posts 3rd-quarter loss on Angra 3 nuclear plant impairment

by Reuters
Friday, 13 November 2015 03:50 GMT

By Caroline Stauffer and Jeb Blount

SAO PAULO/RIO DE JANEIRO, Nov 13 (Reuters) - Brazil's state-run Eletrobras, Latin America's largest electricity utility, posted late on Thursday a 4.01 billion real ($1.06 billion) third-quarter loss due to weaker hydropower generation and a massive impairment charge on its Angra 3 nuclear plant.

The loss at the financially strapped Centrais Eletricas Brasileiras SA, as the company is formally known, was 45 percent greater than the 2.76 billion real loss a year earlier and nearly triple the 1.36 billion reais it lost in the second quarter.

The bulk of the negative result came after the Rio de Janeiro-based electricity utility holding company booked a 3.39 billion real impairment charge on its Angra 3 nuclear power plant.

The writedown was the result of deteriorating economic conditions in Brazil, Eletrobras said. The world's seventh-largest economy is suffering its worst recession in a generation and its electricity industry has been hobbled by project delays, planning mistakes, government-ordered tariff reductions and a serious drought.

The writedown did not include charges related to a giant price-fixing, bribery and political kickback scheme that diverted funds and drove up costs at Eletrobras and other state-led industries such as Petroleo Brasileiro SA, or Petrobras.

Eletrobras said in its earnings statement that an independent review of its operations led by U.S.-based law firm Hogan Lovells in the wake of the scandal had not yet finished and that it had no information about any potential financial impact of the corruption scandal on its balance sheet and earnings.

Angra 3, about 170 kilometers (106 miles) west of Rio de Janeiro, is the third nuclear reactor being built at the country's only nuclear-power generation facility. The 14 billion real ($3.72 billion) Angra 3 project has been at the center of corruption allegations at Eletrobras.

In late July the President of Eletrobras' nuclear power unit was arrested and later charged with taking 4.5 million reais in bribes from contractors building the site. He has resigned from the company.

Eletrobras's preferred shares, the company's most-traded class of stock, have lost more than 40 percent of their value since the arrest.

The main Brazilian contractors on the Angra 3 project have withdrawn from their contracts. ($1 = 3.7675 reais) (Reporting by Caroline Stauffer and Jeb Blount; Editing by Muralikumar Anantharaman)

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