Aneel Blocks Enel Rio’s Request to Refinance $1 Billion Loans

By Brazil Stock Guide – Brazil’s electricity regulator Aneel rejected Enel Rio de Janeiro’s request to refinance about $1 billion in intragroup loans, citing excessive leverage and risks to the distributor’s financial sustainability. The board followed the vote of director Fernando Mosna, who also ordered the matter be forwarded to the Securities and Exchange Commission of Brazil (CVM) for review and potential action, according to Valor Econômico.

Between November 2018 and October 2021, Enel Brasil (subsidiary of Enel SpA, ticker: ENEL.MI) repeatedly sought Aneel’s approval to enter into and expand intragroup loan agreements involving Enel Rio. While the regulator had previously authorized these contracts, the company’s request to refinance them—after reaching the four-year limit—was denied in June 2024.

Aneel’s technical department said Enel Rio’s debt level was “incompatible with its cash generation,” exceeding the prudential limits set by the 2021 Normative Resolution No. 948. The utility argued the refinancing would not increase its debt but merely restructure an existing obligation, potentially lowering financial costs and improving flexibility.

Director Mosna disagreed, affirming that Aneel must assess “not only the formal equivalence of contractual terms but also the material effects on the company’s economic and financial sustainability.” He added that “the regulatory review cannot be limited to market condition checks; it must ensure responsible management of resources and the preservation of financial balance.”

Mosna noted that Enel Rio’s high leverage history reinforced the decision to reject the plan. “Ignoring debt limits would aggravate leverage and further weaken the company’s financial position,” he wrote. The approved vote also requires Aneel to initiate a supervisory procedure to verify whether Enel’s market disclosures align with regulatory reality and whether intragroup operations were conducted without prior authorization.

Before the main vote, Enel Rio attempted to have Mosna removed from cases involving the company, alleging bias. The board unanimously rejected the motion, with Mosna describing it as “an unfounded and opportunistic attempt to fabricate a conflict after the fact.”opportunistic attempt to fabricate a conflict after the fact.” after the fact.”