---------------------- Forwarded by Rob G Gay/NA/Enron on 02/28/2001 02:08 AM 
---------------------------


"Rivera, Nancy A." <NRIVE@opic.gov> on 02/27/2001 12:21:00 PM
To: "'Gay, Rob (Enron)'" <rob.g.gay@enron.com>, "'Anderson, Peter'"  
<Peter.N.Anderson@ENRON.com>, "'Dutt, Ranabir'" <rdutt@ei.enron.com>
cc:  

Subject: FW: Tourinho & Sampaio sacked



FYI

> ** Tourinho Exit Could Affect Power Privatizations - Brazil **
>
> (BNamericas.com) - The dismissal of Brazil's mines and energy minister
> Rodolpho Tourinho could affect the planned privatization of electricity
> companies in a negative or a positive way, either accelerating or
> stagnating the process depending on his replacement.
>
> The market reacted negatively to Brazilian President Fernando Henrique
> Cardoso's sacking on Friday (Feb.23) of Tourinho and social security
> minister Waldeck Ornelas, and the subsequent resignation of Firmino
> Sampaio from the presidency of state power holding company Eletrobras
> president.
>
> Directors and presidents of all federally owned power companies, such as
> Eletrosul, Eletronorte, Furnas and Chesf, could also be replaced as a
> consequence of infighting within the ruling coalition government.
>
> Electricity company shares fell by up to 4.4% on the Sao Paulo stock
> market, as was the case with Parana state integrated power company Copel,
> as well as Cemig and Celesc, which later recovered. Eletrobras shares fell
> 1%-plus on Friday but closed the day stable.
>
> The repercussions of Tourinha's departure - which is a response to raising
> tensions within the fractious four-party ruling coalition ahead of 2002
> presidential elections - will be felt Thursday and Friday when trading
> resumes in Brazil after the Carnival holiday.
>
> The two ministers were allied to senator and ex-governor of Bahia state
> Antonio Carlos Magalhaes of the conservative Liberal Front Party (PFL),
> with which the directors and presidents of companies controlled by
> Eletrobras are also connected.
>
> If Cardoso decides to break with Magalhaes there could be a virtual
> restructuring of the state electricity sector, controlled for more than 20
> years by the Bahian politician. However, some sources say that another PFL
> faction, led by Jorge Bornhausen, is negotiating with Cardoso to ensure
> the continuity of the alliance with Cadoso's social democratic party PSDB.
>
> Other sources, cited in local press, sustain that while Magalhaes
> maintains his network of collaborators in Eletrobras, Cardoso will not be
> able to break with him.
>
> Magalhaes' influence in the country's electricity system dates back to
> 1976, when the military government of general Ernesto Geisel occupied the
> Eletrobras presidency. Since then Magalhaes has maintained his influence
> and collaborators in the state electricity company.
>
> Eletrobras controls 14 companies in all, among them generators Furnas,
> Chesf and Eletronorte, as well as Eletronuclear, which owns the nuclear
> centers Angra 1 and 2 and transmission company Eletrosul.
>
> By staff reporter Alejandro Tumayan
> Business News Americas (BNamericas.com)
>
>
>