Centrais Eletricas Brasileiras : Relevant Fact- Eletrobras PPI

CNPJ: 00.001.180/0001-26 PUBLIC COMPANY

The Company hereby clarifies to the market that the effectivenes of such proposal depends upon governmental authorizations, required legal and regulatory evaluations, analysis of the proposed model and compliance with specific proceedures, considering that Eletrobras is a mixed capital company, with publicly traded shares, listed on the São Paulo Stock Exchange (B3 - Brasil, Bolsa, Balcão), as well as the New York (NYSE) and Madrid (Latibex) stock exchanges.

The Company will keep the market informed about the subject matter of this Relevant Fact.

Rio de Janeiro, August 21, 2017.

"Brasília, August 21, 2017 To Mr.

JOSÉ GUIMARÃES MONFORTE

Chairman of the Board of Directors Centrais Elétricas Brasileiras S.A.

C/C: WILSON FERREIRA JÚNIOR

Subject: Proposal for the privatization of Centrais Elétricas Brasileiras S.A.

Mr. President,

Considering the need to allow the Federal Public Administration to focus its efforts on activities for which the State's attention is paramount to the accomplishment of national priorities,

Considering the need to expand the Country's investments, employment and income opportunities, as well as to stimulate

national technology and industrial development,

Considering the need to expand the public infrastructure projects and to give priority to the key projects pursuant to the legislation in effect,

Considering the need to ensure the supply of eletric energy efficiently and at the lowest price to the Brazilian society and to enable the investment flow in the electric energy segment,

Considering the need to improve Eletrobras' corporate governance, Considering the need to enhance the State's assets,

Considering the need to promote and develop the capital markets, a strategic segment for the Brazilian economy,

Considering the need to generate more funds to finance federal, state and municipal public policies,

Considering the need to increase direct participation by the Brazilian society in Eletrobras' corporate capital,

Considering the need to promote Eletrobras' employees, stimulating professional development, merit recognition and the participation in the company's management, and

Considering the importance to the Brazilian economy of the recovery of Eletrobras,

We inform this Ministry's decision to propose to the Council of the Investment and Partnership Program of the Presidency the privatization of Centrais Elétricas Brasileiras S.A. - Eletrobras, with the following conditions:

1. - a financial return to the State;

2. - the compliance with the highest standards of corporate governance in the capital markets;

3. - the limitation of majority shareholders' voting rights, ensuring the democratization of Eletrobras' control;

4. - a golden class share to be owned by the State, which shall grant to the State special powers in connection with changes to Eletrobras' corporate name, corporate objective or companies controlled by Eletrobras; V - the offering of part of Eletrobras' shares to its employees and employees of companies directly or indirectly controled by Eletrobras;

1. - the reduction of eletric energy segment fees, directing prioritary funding to Social Tariffs for Electric Energy ("Tarifa Social de Energia Elétrica");

2. - eletric energy trading under the independent production regime; and VIII - the development, directly or indirectly through its subsidiary Companhia Hidro Elétrica do São Francisco - CHESF, of the São Francisco river basic through a revitalization program.

Sincerely,

FERNANDO COELHO FILHO

Minister of Mines and Energy"