WASHINGTON, D.C., April 3, 1998—The International Finance Corporation, together with Banco Brascan, yesterday privatized Companhia Energetica do Ceará (COELCE), the state-owned electricity distribution company serving the state of Ceará in Brazil. It was sold to a consortium formed by Cerj, Endesa, and Enersis for US$880 million (R$987 million equivalent).
COELCE, the largest company in the state of Ceará in northeastern Brazil, sells electricity at the annual rate of 4,778 gigawatts per hour to 1.4 million customers. The privatization opens the way for investments in the state’s distribution system and ensures that Ceará’s power needs are met. This transaction is part of the modernization and restructuring program of the government of Ceará, which is the fastest growing state in Brazil with an average annual growth of 7.6 percent in the last decade.
IFC also advised COELCE on the restructuring of the Pecém power plant project, a 240-megawatt combined-cycle gas plant in the port region of Pecém. The project was awarded on March 31 to a consortium including the Brazilian Companhia Siderurgica Nacional and Texaco. It will ensure regular energy supply for COELCE and improve system stability needed to respond to rising demand and generation capacity.
The privatization and the Pecém project will contribute to sustainable growth for Ceará and give the state a competitive advantage in its industrial development. IFC’s involvement reinforces its commitment to reach the less developed areas of Brazil, an important part of IFC’s strategy for the country. The privatization will serve as a model to encourage other public sector enterprises in the region to take similar initiatives.
Mr. Ednilton Gomes de Soárez, State Secretary of Finance indicated that the proceeds of the privatization would go to the government’s investment program in infrastructure and social sectors. It would also help to establish a pension fund for state government employees.
The consortium of power companies-Cerj from the state of Rio de Janeiro, Endesa of Spain, and Enersis of Chile-hold 82.7 percent of COELCE’s voting shares. Banco Brascan, a Brazilian investment bank associated with Mellon Bank, served as the local financial advisor.
IFC, part of the World Bank Group, fosters growth in the developing world and in emerging economies by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
