Companhia Energetica de Minas Gerais Cemig (CIG)

[renoldman]

I have done a little bit of digesting and reading to see how the change in regulation affects our company.

I think the changes really affect those that are in the Transmission of power.

Now, is CIG involved with this?

YES.

Now what does the changes in policy do?

The change in policies means that companies will not be paid as high of a percent compared to what they pay. The government will also review the real VALUE of the assets and pay based on their valuations.

As you can imagine this would be disastrous for a company that is focused on Transmission. Why? Because the cash generated is more or less like a fixed income asset, companies can not sell more, especially if their business is just transmission of power.

For CIG, the company's profit is obviously affected, but as the company is involved in the Distribution and Generation of power they will not be as affected as others.

In fact, the regulation may cause smaller players to exit the market which would give CIG the ability to grow.

Why? Because they can take on the transmission assets of other companies and still generate a profit due to efficiency.

So, CIG is likely to recover.