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Brazil Energy Ministry seeks federal cash infusion for Eletronuclear amid risk of insolvency

Brazil's Mines and Energy Ministry asked the federal government to inject capital into Eletronuclear in order to prevent its imminent insolvency. This would add to the financial strains of the Angra 3 nuclear reactor in Rio de Janeiro, which is still unfinished.

In a Monday letter seen by, Minister Alexandre Silveira informed the Finance, Planning and Management Ministries that planned investments for the maintenance of Angra 3 equipment and facility were completely cut from the budget 2026.

Silveira said that the situation was "severely" compromising Eletronuclear, the state-run nuclear energy generator's ability maintain Angra 3 and service debts with banks BNDES Caixa Economica and Caixa Federal and make payments to a electricity sector fund.

He claimed that the company would be "imminently insolvent" if it did not make a capital contribution to the budget cycle of next year. Without citing any figures, he referred to documents where the firm indicated a requirement for 1.4 billion reals ($262,70 million) to avoid government diluting before a planned bond issuance.

Eletronuclear and the ministries did not respond immediately to comments.

Budget uncertainty has caused a delay in the issuance of 2.4 billion reais ($450.4m) of debt to finance works that would extend Angra 1's operation by 20 years. Angra 1 is one of two nuclear plants in Latin America, operated both by Eletronuclear.

According to a government agreement the securities would have been issued by Eletronuclear, and Eletrobras could convert them later into shares, without having to increase its stake or require additional federal support.

Eletronuclear also called the issue "indispensable" in documents seen by. They cited short-term debts of 570 millions reais due to banks ABC and BTG in December, and cash that was expected to run out before November.

If funds are not raised, BNDES, Caixa, and Santander could be in default, requiring "extraordinary liquidation measures" by October.

Requests for comments from the lenders were not immediately responded to.

ENBPar (which controls Eletronuclear) asked the Finance Ministry to convene a shareholder's meeting in August, but it has not been called.

According to the internal studies in the documents, the government must pour 1.4 billion reals into Eletronuclear if it wants to keep control of the company.

(source: Reuters)