A judge has suspended the $5.2 billion sale of a natural gas pipeline network in Brazil to a consortium led by Brookfield Infrastructure.
The consortium had agreed in September to purchase a 90 percent stake in the Nova Transportadora do Sudeste natural gas network from Petroleo Brasileiro (Petrobras), the country’s embattled national oil company. An appeal is expected against the injunction, which was issued Friday by a regional federal court judge.
Brookfield’s agreement to purchase the network of natural gas pipelines and storage facilities last year came as Petrobras sought to sell off assets in the wake up a corruption scandal. The judge, however, ruled that the sale was not sufficiently publicised to promote competition, according to Bloomberg News.
Brookfield said appeals against the injunction are expected by the first half of March or earlier. The Toronto-based firm said it “intends to take all necessary measures to protect its interests and enable the NTS transaction to proceed”.
For its part, Petrobras said it is “taking all the necessary measures to protect its investors and own interests”.
While some investors have shied away from the region following the Petrobras scandal, Brookfield has touted a “contrarian view” and remained active in South America. The firm agreed to buy a majority stake in Odebrecht Ambiental, a Brazilian water and sewer company, and a share of the Olmos irrigation project in Peru. It was also reported to be in talks over a $5.2 billion Peru gas pipeline.
Already, 2017 has highlighted some of the market’s challenges. In January, an official in Peru told state TV that payment in the pipeline deal in that country may be withheld by the government. Now, the courts in Brazil have created another obstacle for Brookfield’s ambitions in the region.
Other firms in the Transportadora do Sudeste consortium include China Investment Corporation and Singapore’s GIC. When the agreement was reached in September, Brookfield’s chief executive of infrastructure called the deal a “unique opportunity to invest in a large-scale, high-quality utility business and participate over time in Brazil's growing gas industry”.