The consolidation of the energy distribution sector “is necessary and must occur” and CPFL Energia is evaluating opportunities, which include the assets of AES Sul, stated the company’s CEO, Wilson Ferreira Junior, yesterday in a conference call with analysts. Ferreira highlighted that the concession that CPFL has in Rio Grande do Sul, RGE, is the most efficient in the region, which means that the company has a good position in the state where AES Sul is located. “I understand that these are assets that will make sense in the company’s growth process, as long as the company’s financial discipline is respected,” he said.
According to the executive, the conditions set by the National Electric Energy Agency (Aneel) for the renewal of energy distribution concessions, such as the requirement to comply with a series of quality and financial criteria, already reinforce this consolidation scenario. Regarding Celg D, which is due to be auctioned soon, the price set was considered high.
According to Ferreira, the Goiás distributor is an asset located in a very good market, but its operating performance is worse than that of the group's distributors. However, the valuation multiple for Celg D's price was much higher when the auction price was established. "We found that we don't know, and apparently the analysts don't know either, why the price was set like that," said Ferreira.
For him, it will be possible to better understand how the sale process of the other Eletrobras distributors will take place after understanding the price of Celg D. In the private sector, he is betting on a process of consolidation of distributors, especially those that are unable to perform as established by Aneel for the renewal of concessions. Questioned yesterday by analysts about opportunities to purchase assets, Ferreira highlighted that “the group’s hallmark is being financially disciplined”. “We are in a better position, but we will not give up discipline”, he stated. “The moment is the buyer’s, in the sense that asset prices should decrease and we will obviously be attentive to this, but we will continue to be attentive to discipline”, he said.
CPFL expects to invest around R$2,1 billion in 2016, including distribution and generation. The investment plan for the next five years is approximately R$8 billion. The company reported a 40,6% year-over-year drop in profits for the fourth quarter of 2015, to R$304,2 million. The company's revenue fell 8,7% from October to December, to R$4,79 billion.
Valor Econômico - 22/03/2016
Access our Electric Energy Report http://ow.ly/ZGbsv
