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Brazil’s state-owned development bank, known as BNDES, will finance as much as half of the purchase price of electricity utility Cia. Energetica de Sao Paulo, the Estado de S. Paulo newspaper reported.

BNDES will provide credit for between 30 percent and 50 percent of the sale of the power generator, known as Cesp, that is scheduled for sale March 26, the newspaper said. Cesp is controlled by the government of Brazil’s State of Sao Paulo.

The minimum price at auction is 6 billion reais ($3.46 billion), Estado said.

Sao Paulo may not receive a large premium over the minimum price because the federal government, which has jurisdiction over the country’s hydroelectric resources, will not promise to renew the licenses to run three dams that expire in 2011 and 2013.

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net.