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RIO DE JANEIRO, Sept 30 (Reuters) - Brazil’s state-led electricity-utility holding company Eletrobras said on Friday that the country’s power industry regulator ordered it to return 2.04 billion reais ($625 million) to a government utility expansion fund, one-third the amount it was ordered to pay before an appeal.
The payment is for excess profit and fees, plus interest and inflation, that Centrais Eletricas Brasileiras, as Eletrobras is formally known, earned between 1998 and 2011 for managing the fund, Eletrobras said in a statement filed with securities regulators.
In May, regulator Aneel ruled that Eletrobras had to return nearly 7 billion reais of profit plus interest it earned holding the fund’s money that should have been used to help the fund grow, not pay Eletrobras costs. Eletrobras appealed.
By partly accepting the appeal, Aneel eased the impact of the May decision, which was a serious financial setback for a company whose revenue has plunged after the government forced it to take on money-losing electricity distributors even as it was being forced to cut power rates.
Its situation has been made worse by a drought and the need to make huge investments in hydroelectric dams, even as revenue fell.
Meanwhile investors have sued after the company became involved in a price-fixing, bribery and political kickback affair involving some of the same construction and engineering firms that are part of a scandal at state-led oil company Petrobras.
According to the Eletrobras statement on Friday, Aneel accepted Eletrobras’ appeal in part, leading to the values it now says Eletrobras must return to the fund.
The fund, known as the Global Reversion Fund, or by its Portuguese-language initials RGR, manages money used to pay for Brazil’s rural electrification program and to extend the electricity distribution system to other unserved areas.
Created in 1957, the RGR has also been used to reduce electricity costs for the poor and to make general improvements to Brazil’s electricity system, according to Eletrobras’ website.
It is also used to cover costs when public electricity utility concessions run by private companies expire or otherwise return to public control. It is financed by a 2.5 percent tax on utility assets that is passed on to consumers in their electric bill. ($1 = 3.2583 Brazilian reais) (Reporting by Jeb Blount; Editing by Chizu Nomiyama and Jeffrey Benkoe)