SAO PAULO (Reuters) - A Brazilian federal judge overturned a court order holding up the sale of units of state utility Centrais Eletricas Brasileiras SA (ELET6.SA), and the government committed to assuming certain losses at the company, as the divestiture process continues to advance.
Andre Fontes, the head judge of a regional federal court, on Tuesday overturned a decision by a Rio de Janeiro judge earlier in July that effectively delayed the sale of six distribution units at the company, the court said in a statement on Tuesday night.
On Monday, Brazil’s planning minister, Esteves Colnago, told Reuters the government plans to auction off one of the units on July 26, while putting off the auction of the other five units owned by Eletrobras, as the company is commonly known, until Aug. 30.
The Tuesday court order would remove one obstacle to that process.
Also on Tuesday, the Brazilian government pledged to assume the losses from the six unprofitable units, starting at the beginning of August, should the units not be successfully privatized this year, newspaper Estado de S. Paulo reported, citing documents published by the Mining and Energy Ministry.
Last year, according to the paper, the units posted losses of 4.2 billion reais ($1.09 billion).
Eletrobras did not immediately respond to a request for comment on Wednesday.
Reporting by Gram Slattery; Editing by Steve Orlofsky