March 20, 2018 / 10:18 PM / 6 months ago

UPDATE 1-Brazil's energy ministry shake-up threatens Eletrobras privatization -sources

(Adds details on influence of Lobao and Braga over Eletrobras privatization, response from representatives)

By Rodrigo Viga Gaier and Luciano Costa

RIO DE JANEIRO/SAO PAULO, March 20 (Reuters) - The expected resignation of Brazil’s Energy Minister Fernando Coelho Filho in April to run for a governorship or congressional seat is damaging efforts to privatize state-controlled power holding company Centrais Eletricas Brasileiras SA, two sources close to the matter said on Tuesday.

The sources, who spoke on condition of anonymity because they were not authorized to speak to the press, said it had become clear that veteran Senator Edison Lobao, a former energy minister, had regained his political grip on the energy sector.

Another senator and former energy minister, Eduardo Braga, has also risen as a powerful force in determining who becomes the next minister. Lobao and Braga, both members of the Brazilian Democratic Movement Party (PMDB), are against any privatization.

The government hopes to raise 12.2 billion reais ($3.68 billion) by privatizing Eletrobras, but the project faces open resistance in Congress.

According to the sources, should either Lobao or Braga succeed in appointing one of their choices to head the ministry, it could completely scuttle the privatization, as the appointee would have similar anti-privatization leanings.

Representatives for Braga denied the senator was moving to influence the appointment of the next energy minister. Representatives for Lobao did not immediately respond to requests for comment.

$1 = 3.31 reais Reporting by Rodrigo Viga Gaier in Rio de Janeiro and Luciano Costa in Sao Paulo Writing by Brad Brooks and Gram Slattery Editing by Lisa Shumaker and Richard Chang

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