PRESIDENCY OF THE REPUBLIC

COUNCIL OF THE PRESIDENCY OF THE REPUBLIC'S INVESTMENT PARTNERSHIP PROGRAM

RESOLUTION No. 20 - NOVEMBER 8, 2017

Approves the transfer of Centrais Elétricas Brasileiras S.A. - Eletrobras' stock control in Companhia Boa Vista Energia S.A., Companhia Energética de Alagoas, Companhia Energética do Piauí, Centrais Elétricas de Rondônia S.A., Companhia de Eletricidade do Acre S.A. and Amazonas Distribuidora de Energia S.A., associated with the concession granting of the public electricity distribution service under the conditions and any other measures it determines.

THE PRESIDENCY OF THE REPUBLIC'S COUNCIL OF INVESTMENT PARTNERSHIP PROGRAM, in its attributions, granted by articles 4, 5 and 7 of Law No. 13,334, of September 13, 2016, and in view of the provisions of article 6, item II, of Law No. 9,491, of September 9, 1997, and

Whereas, Centrais Elétricas Brasileiras SA - Eletrobras holds 100% (one hundred percent) of the total and voting capital stock of Boa Vista Energia S.A. - Boa Vista, Companhia Energética de Alagoas - Ceal, Companhia Energética do Piauí - Cepisa, and approximately 96.71% of the voting capital stock of Companhia de Eletricidade do Acre S.A. - Electroacre;

Whereas, the distribution companies and the concession of the public electricity distribution service they held were qualified as a national priority and included in the Investment Partnerships Program (PPI) on November 1, 2016, through Decree No. 8,893, of November 1, 2016;

Whereas, Decree No. 8,893 of 2016 designated the Ministry of Mines and Energy as responsible for coordinating and monitoring the procedures and stages of the privatization process;

Whereas, Decree No. 8,893 of 2016 designated the National Economic and Social Development Bank - BNDES as responsible for executing and monitoring the privatization process of the electricity distribution companies, pursuant to Article 6, paragraph 1, and Article 18, of Law No. 9,491, of September 9, 1997;

Whereas, the Ministry of Mines and Energy, in the use of the attributions granted by Article 87, sole paragraph, items II and IV, of the Constitution, and in view of the provisions of Article 9, paragraph 1, of Law No. 12,783 of January 11, 2013, Decrees No. 7,805, September 14, 2012 and No. 8,461, dated June 2, 2015, designated Amazonas Distribuidora, Eletroacre, Ceron, Cepisa, Ceal and Boa

Vista as responsible for the provision of the public electricity distribution service, under the terms of, respectively, MME Ordinances No. 420, No. 421, No. 422, No. 423, No. 424 and No. 425, of August 3, 2016, in order to guarantee the continuity of the service, which will be provided under the terms and conditions established in Ordinance MME No. 388, of July 26, 2016;

Whereas, the shareholders of Eletrobras, by means of the 165th Extraordinary Shareholder Meeting held on July 22, 2016, decided, by majority vote, to approve, pursuant to the Brazilian Corporate Law, the transfer of share control of the distribution companies, pursuant to Article 8, paragraph 1 of Law No. 12,383, of 2013, with the wording provided by Law No. 13,360, dated November 17, 2016, provided that, until the transfer of a distribution company to the new controlling shareholder, such distribution company receives directly from the Federal Union or through tariff charging, the resources and remuneration necessary to operate, maintain and make investments that are related to the public services of the respective distribution company, maintaining the economic and financial balance of the distribution company, without any contribution of resources, in any capacity, by Eletrobras;

Whereas, Article 8, paragraph 1-A, of Law No. 12,783, of 2013, allowed the Union, when the service provider is a legal entity under its direct and indirect control, to grant a concession contract for a period of 30 (thirty) years associated with the transfer of control of the legal entity providing the service;

Whereas, the National Electricity Agency - ANEEL held, from December 2016 to February 2017, Public Consultation No. 94/2016, with the objective of receiving contributions to improve the drafting of the new Public Service Concession Agreement of Energy Distribution, in compliance with the provisions of Article 8, paragraph 1-A, of Law No. 12,783, of 2013;

Whereas, the Executive Board of ANEEL, through Order No. 1,213, of May 2, 2017, approved the draft of the Concession Agreement of the Public Service of Distribution of Electric Energy for use in the bidding processes referred to in paragraph 1-A of Article 8 of Law No. 12,783, of 2013;

Whereas, the Ministry of Mines and Energy, through Ordinance No. 342, dated August 25, 2017, promoted a new Public Consultation in the period from August 28, 2017 to September 6, 2017, for specific adjustments to the draft for the new Concession Agreement;

Whereas, the Ministry of Mines and Energy, by means of Ordinance No. 346, dated August 31, 2017, determined that, in the 2017 tariff process, ANEEL would make, in a transitory manner, the regulatory parameters regarding operating costs and non-technical losses more flexible, with the objective of allowing the economic balance of the public electricity distribution service concessions to which the distribution companies were entitled; and

Whereas, the publication of Decree No. 9,192 of November 6, 2017, which regulates the electric power distribution concession bidding associated with the transfer of control of the legal entity providing the service under direct or indirect control of the Federal Government,

DETERMINES:

Article 1 - Pursuant to this Resolution, the conditions for the transfer of the majority control held by Centrais Elétricas Brasileiras SA - Eletrobras in Companhia de Eletricidade do Acre S.A. - Eletroacre, Centrais Elétricas de Rondônia S.A. - Ceron, Companhia Energética do Piauí - Cepisa, Energias de Alagoas - Ceal, Boa Vista Energia S.A. - Boa Vista and Amazonas Distribuidora de Energia

  1. - Amazonas Energia are hereby approved, as well as the preferred shares issued by them, in association with the granting of the concession of the electric energy distribution service in areas defined by the National Electric Energy Agency - ANEEL;

    Article 2 - The privatization of the distribution companies together with the granting of a new electric power distribution concession, will take place in accordance with the provisions of Article 4, items I and VI, of Law No. 9,491, dated September 9, 1997, through the sale of the following:

    1. - Eletroacre: the number of common and preferred shares owned by Eletrobras representing at least 96.71% (ninety-six dot seventy-one percent), minus 1 (one) common share, of Eletroacre's capital stock on the date of settlement of the auction, for the total amount of R$50,000.00 (fifty thousand reais);

    2. - Ceron: the number of common shares owned by Eletrobras representing 100% (one hundred percent), minus 1 (one)common share, of Ceron's capital stock, on the date of settlement of the auction, for the total amount of R$50,000.00 (fifty thousand reais);

    3. - Cepisa: the number of common shares and preferred shares owned by Eletrobras representing 100% (one hundred percent), minus 1 (one)common share, of Cepisa's capital stock, on the date of settlement of the auction, for the total amount of R$50,000.00 (fifty thousand reais);

    4. - Ceal: the number of common shares and preferred shares owned by Eletrobras representing 100% (one hundred percent), minus 1 (one)common share, of Ceal's capital stock, on the date of settlement of the auction, for the total amount of R$50,000.00 (fifty thousand reais);

    5. - Boa Vista: the number of common shares owned by Eletrobras that represent 100% (one hundred percent), minus 1 (one)common share, of Boa Vista's capital stock, on the date of settlement of the auction, for the total value of R$50,000.00 (fifty thousand reais); and

    6. - Amazonas Distribuidora: the number of common shares and preferred shares owned by Eletrobras representing 100% (one hundred percent), minus 1 (one) common share, of Amazonas Distribuidora's capital stock, on the date of settlement of the auction, for the total amount of R$50,000.00 (fifty thousand reais).

    Paragraph 1 - Eletrobras shall remain the holder of 1 (one) common share in each distribution company, after the sale of the shares to employees and retirees pursuant to Article 11 of this Resolution.

    Paragraph 2 - The payment for the shares held by Eletrobras shall be made in cash and in national currency.

    Paragraph 3 - The minority shareholders of Eletroacre shall be entitled to sell their shares to the new controlling shareholder under the same conditions and prices paid by Eletroacre for the shares of Eletrobras.

    Article 3 - Eletrobras shall, prior to the effective transfer of the share control, make adjustments to the distribution companies by converting debt into equity capital or through the assumption of debts of the distribution companies to Eletrobras and / or third parties, in the following amounts:

    1. - Eletroacre: R$113,779,871.99 (one hundred and thirteen million, seven hundred and seventy-nine thousand, eight hundred and seventy-one reais and ninety-nine centavos);

    2. - Ceron: R$1,872,522,463.42 (one billion, eight hundred seventy-two million, five hundred twenty-two thousand, four hundred and sixty-three reais and forty-two centavos);

    3. - Cepisa: R$50,000.00 (fifty thousand reais); IV - Ceal: R$50,000.00 (fifty thousand reais);

    1. - Boa Vista: R$342,120,486.20 (three hundred and forty-two million, one hundred and twenty thousand, four hundred and eighty-six reais and twenty centavos); and

    2. - Amazonas Distribuidora: R$8,911,866,558.94 (eight billion, nine hundred and eleven million, eight hundred and sixty-six thousand, five hundred and fifty-eight reais and ninety-four centavos).

    Paragraph 1 - In addition to the adjustments provided for in the caput of this article, Eletrobras shall assume the rights and obligations of the distribution companies, related to the Fuel Consumption Account (CCC) and the Energy Development Account (CDE), including credits and debits that are subsequently recognized by a competent entity or by the distribution companies and whose generating event is prior to the transfer of the share control referred to in this Resolution.

    Paragraph 2 - Without limitation to the provisions of paragraph 1 of this article, Amazonas Distribuidora may pay debts to Eletrobras by transferring the entirety of the shares issued by Amazonas Geração e Transmissão SA - Amazonas GT, in favor of Eletrobras and/or third parties, whose value will be deducted from the amount of adjustment indicated in item VI of this article.

    Paragraph 3 - The General Meeting of Eletrobras for the resolution of the sale of the share control referred to in this Resolution and the measures provided for in this article shall be held until December 29, 2017, in accordance with what is established in Article 4, paragraph 12, of Decree No. 9,192, of November 6, 2017 and Article 42, item I, of Eletrobras' Bylaws.

    Paragraph 4 - The unbundling of Amazonas Distribuidora shall be completed by March 2,

    2018.

    Article 4 - The Privatization Notice shall indicate the quantity and value of the shares of

    each distribution company, to be offered in the privatization bid, and each lot must be purchased in full by the same buyer.

    Article. 5 - The bidding process will take place in a sequential auction mode, to be held at a public session, through the presentation of economic proposals in closed envelopes, with provision for open outcry in the cases set out in the Privatization Notice.

    Paragraph 1 - The bidding will be carried out with reversal of phases and only the qualification documents of the winner(s) of the auction will be opened.

    Paragraph 2 - The bidder, under penalty of disqualification, must present a specific closed envelope for each distribution company, indicating the respective economic proposal or express manifestation of lack of interest.

    Paragraph 3 - Prior to the beginning of each opening stage of the closed envelopes, the bidder may decline its economic proposal, provided that it has been recognized as a winning bidder in any of the previous auctions.

    Paragraph 4 - The bidder who offers the highest classification percentage, as set forth in the Request for Proposal, shall be considered the winner.

    Paragraph 5 - The classification percentage shall consist of a single rate that:

    I - from zero to one hundred points will indicate the discount regarding the additional transitional tariff for the concession of electric energy distribution, in the form of flexibilization of the regulatory parameters and the tariff recognition related to the Global Reversion Reserve (RGR) loans, dealt with in Article 4, paragraph 4, item IV, of Law No. 5,655, of May 20, 1971, contracted by the distribution companies, as approved by ANEEL; and

    Eletrobrás - Centrais Elétricas Brasileiras SA published this content on 09 November 2017 and is solely responsible for the information contained herein.
    Distributed by Public, unedited and unaltered, on 09 November 2017 11:18:11 UTC.

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