Eletrobras Profit Plunges on Provisions for Electricity Loan Litigation

Shares in Brazilian state-run power company Eletrobras plunged on Wednesday after it reported third-quarter net income of 965 million reais ($175.4 million), down 66% year-on-year, hit mainly by provisions relating to ongoing litigation, Reuters reported. The lawsuits relate to a compulsory energy loan program, which required industrial energy customers to provide money to pay for Brazil's electricity sector. The government promised to repay the companies but this has been repeatedly postponed. Centrais Eletricas Brasileiras SA, as the company is formally known, said on Tuesday adjustments in provisions for contingencies totaled 9.43 billion reais in the third quarter. This included a 5.25 billion reais reclassification to "probable" from "remote" for the so-called "compulsory loan on electricity" lawsuits. Read more.