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Governor threatens to block hydro production and Furnas privatisation

Itamar Franco, the governor of Brazil’s Minas Gerais state, has threatened to stop the water supply from rivers supplying hydroelectric plants owned and operated by Furnas, if the utility is privatised. The governor said the sale was unconstitutional and he would take the central government to court to block it.

The Brazilian government has said it wants to sell Furnas Centrais Eletricas as part of its privatisation effort and the restructuring of the power sector. However, the process has been hampered by a series of court delays.

Although Brazil hoped to raise R$8B in 1999 by selling off Furnas’ generating assets, Rodolfo Tourinho, Brazil’s Minister of Mines and Energy, has conceded that Furnas

will only be sold off in 2000 due to several injunctions against the privatisation of

the company. One of the key issues is the pension fund of

employees, with debts of R$1.2B.

Electrobras, a federal holding company, owns Furnas along with other federal utility companies Eletronorte, Chesf and Eletrosul.

Based in Rio de Janeiro, Furnas serves the Federal District and the states of São Paulo, Minas Gerais, Rio de Janeiro, Espírito Santo, Goiás and Tocantins.

Brazil’s treaty with Paraguay has put Furnas in charge of about 83% of Itaipu’s electricity services with Eletrosul being assigned the balance.

In addition to Itaipu, Furnas owns and operates a complex of nine hydroelectric power plants and two thermal plants which have a total capacity of 9080MW.

The company also owns a transmission line system of more than 18000km.