(Adds details, background)
RIO DE JANEIRO, Sept 30 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
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
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
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'
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
($1 = 3.2583 Brazilian reais)
(Reporting by Jeb Blount; Editing by Chizu Nomiyama and Jeffrey