Cenbank: Power companies owe banks US$5.2bn

According to a study by Brazil's central bank, power generators and distributors in the country owed a total of 15.2bn reais (US$5.2bn) to Brazilian banks in June, and have a high default risk level, newspaper Folha de Sao Paulo reported. The provisioning banks make for the power sector accounts about 10.8% of the provisioning for all loan operations, the study said. The high level of default risk is a result of the crisis the power system is going through. The 2001-2002 energy rationing in the country and a slow economy have reduced distributors' revenues. The sector is also suffering from regulatory uncertainties which have forced companies to withhold investments, while acute foreign exchange variations have increased companies' foreign debt obligations. An example is US utility AES, which has generating and distributions interests in Brazil and is renegotiating its US$1.2bn debt with Brazil's national development bank BNDES. Light, the Brazilian distribution subsidiary France's state power company EDF, is also in talks with banks to review terms of a 2bn reais debt. In August, BNDES announced a 3bn real loans program to help power distributors to meet 8bn reais in short-term debt obligations. BNDES president Carlos Lessa told local press this week that companies have not yet requested loans, but are preparing to meet conditions to borrow the funds.