Centrais Eletricas Brasileiras S A : Market Annoucement - 05.18.2020 - Norges Bank

MARKET ANNOUNCEMENT

CENTRAIS ELÉTRICAS BRASILEIRAS S/A

CNPJ: 00.001.180/0001-26 | NIRE: 533.0000085-9

PUBLICLY TRADED COMPANY

Centrais Elétricas Brasileiras S/A ("Company" or "Eletrobras") (B3: ELET3, ELET5 & ELET6; NYSE: EBR

• EBR.B; LATIBEX: XELT.O & XELT. B), as a result of the recent news regarding the exclusion of the Company from the portfolio of the Norwegian Government Pension Fund Global, hereby informs its shareholders and the market in general that it regrets this decision, especially as the Company understands that it was based on out-of-date information, disregarding the clarifications and updated information provided by the Company in a timely manner.

The primary reason for the exclusion was the alleged human rights violation by the Belo Monte Hydroelectric Powerplant ("UHE Belo Monte"), which is being administered by Norte Energia S.A ("SPE Belo Monte") and in which the Company holds 49.98% (forty nine point ninety eight percent) of the shares, along with other state-owned and private companies. The Council on Ethics of the Norwegian Government Pension Fund Global based most of its assessment on a technical note from FUNAI dated 2015, which contains out-of-date information, as reported by the Company to the Council on Ethics.

Eletrobras and SPE Belo Monte have adopted several measures to address the requests and requirements of FUNAI, and there are currently no delays in relation to the social and environmental obligations undertaken by the Company and SPE Belo Monte. The project has received all environmental permits, for which compliance with these conditions were conditions precedent.

The Company has invited the members of the Council on Ethics to visit Belo Monte on more than one occasion in order to inspect the plant and all the benefits brought to the area and the local population, but unfortunately the invitation has never been accepted.

A full transcript of the letter sent on this date by the Company to the Council on Ethics regarding the exclusion is attached.

The Company reaffirms its commitment to human rights and the continuous improvement of its policies and practices in connection with this subject.

Rio de Janeiro, May 18, 2020.

Elvira Cavalcanti Presta

Chief Financial and Investor Relations Officer

INTERNET: www.eletrobras.com/elb/ri

E-MAIL ADDRESS: ombudsman- [e-mail]

ADDRESS: Rua da Quitanda, 196 - 9º andar. 20090-070, Centro. Rio de Janeiro - RJ

EBR & EBR.B
LISTED	ELET3 & ELET6

NYSE

This document may contain estimates and projections that are not statements of past events, but reflect the beliefs and expectations of our management and may constitute estimates and projections of future events under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. The words "believes," "may," "estimates," "continues," "anticipates," "intends," "expects," and the like are intended to identify estimates that necessarily involve risks and uncertainties, known or unknown. Known risks and uncertainties include, but are not limited to: general economic, regulatory, political and commercial conditions in Brazil and abroad, changes in interest rates, inflation and the value of the Brazilian Real, changes in the volumes and pattern of consumer use of electricity, competitive conditions, our level of indebtedness, the possibility of receiving payments related to our receivables, changes in the levels of rainfall and water in the reservoirs used to operate our hydroelectric plants, our financing and capital investment plans, existing and future government regulations, and other risks described in our annual report and other documents registered with the CVM and SEC. Estimates and projections refer only to the date they were expressed and we assume no obligation to update any such estimates or projections due to the occurrence of new information or future events. Future results of the Companies' operations and initiatives may differ from current expectations and investors should not rely solely on the information contained herein. This material contains calculations that may not reflect accurate results due to rounding.

Centrais Elétricas Brasileiras S.A.

PR

Rua da Quitanda, 196 - 24º 20091-005 Rio de Janeiro - RJ Tels: (21) 2514-6101 / 6001 [e-mail]

CTA-PR-01226/2020

Ref.: Recommendation to exclude Centrais Elétricas Brasileiras S.A. from the Government Pension Fund Global.

Rio de Janeiro, May 18th, 2020.

Ms. Eli Lund

Chief Executive of the Secretariat

Ms. Hilde Jervan

Chief Advisor

Council on Ethics

Etikkrådet for Statens pensjonsfond utland

Postboks 8008 Dep

N-0030 Oslo, Norway

Subject: Exclusion of Centrais Elétricas Brasileiras S.A. from the Norwegian

Government Pension Fund Global.

Dear Ms. Lund and Ms. Jervan,

We have been informed by the press of the exclusion of Eletrobras from the investment portfolio of the Norwegian Government Pension Fund Global for the reasons stated in the "Recommendation to exclude Centrais Elétricas Brasileiras S.A. from the Norwegian Government Pension Fund Global" report of the Council on Ethics.

We deeply regret this decision. As we demonstrate below, your report is based on outdated information obtained from the media and websites that did not consider all clarifications, information updates and documents that were made available by the Company on a timely basis, such as its following correspondence: (i) DF-0464/2018 of February 1st, 2018; (ii) DF-1128/2018 of March 15th, 2018; and (iii) PR-4053/2018 of December 12th, 2018.

Concerning the Belo Monte hydroelectric powerplant, the Council on Ethics draws most of its conclusion from a paper issued by Brazil's National Indian Foundation (FUNAI) dated 2015. This information is out-of-date, as reported by Eletrobras to you in repeated communications. Besides, it merely pointed out planned actions as part of the Indigenous Component of the plant's Basic Environmental Project that were falling behind schedule. Importantly, this delay did not prevent FUNAI and the Brazilian Institute of Environment and Renewable Natural Resources (IBAMA) from granting

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CLASSIFICAÇÃO: PÚBLICO

Centrais Elétricas Brasileiras S.A.

PR

Rua da Quitanda, 196 - 24º 20091-005 Rio de Janeiro - RJ Tels: (21) 2514-6101 / 6001 [e-mail]

Belo Monte's Operating License. FUNAI and Norte Energia S.A. (NESA) agreed on a Term of Commitment establishing new deadlines and actions to be undertaken, which have been fully complied with by NESA without any indication of relevant failures since then by FUNAI or other authorities. In fact, Eletrobras and NESA have taken numerous steps to resolve all requirements presented by FUNAI, and there is currently no delay regarding the social and environmental commitments made by NESA and Eletrobras. This is evidenced by the fact that the project has been granted all the required environmental licenses, for whose issuance the aforementioned commitments were preconditions.

The Company has invited members of the Council on Ethics to visit Belo Monte in order to inspect the plant and all the measures undertaken by NESA concerning the indigenous people and population located at the site and its surroundings, including public hearings, allowing them the opportunity to verify the social and environmental actions that have been implemented, particularly those concerning the allegations of human rights violations by the Council on Ethics.

Furthermore, the Company has also offered you the opportunity to directly engage with the local community and to witness the benefits brought by the project. Unfortunately, the invitation was not accepted by the Council on Ethics.

On March 1st, 2019, the Company requested an update on the Council on Ethics' evaluation and was told by email that the process was still ongoing and could take some time. After that we did not receive any further communication. Therefore, our Board of Directors was quite surprised to learn of the decision of the Council on Ethics through the media, as appointed above.

With respect to the amounts involved, NESA has so far directly invested R$ 6 billion (historical value) regarding compliance with environmental conditions associated with the environmental licensing. Disbursements of R$ 225 million have already been made out of the R$ 500 million foreseen for the Xingu Sustainable Regional Development Plan. In addition, Eletrobras invested approximately R$ 2.5 million in social responsibility projects in the region, most notably in ethnodevelopment projects with the Kayapó indigenous communities in the Middle Xingu since 2012, and a football academy for 1,000 boys and girls from Altamira in 2011.

The Company strongly disagrees that the project was responsible for, or even contributed to, Human Rights violations. Quite the contrary, prior to the implementation of the Project, the Brazilian Government had not undertaken any significant public policies or projects in this region, leading to very few public investments aiming towards the welfare of both indigenous peoples and local population. The Belo Monte Project met one of the main guidelines, which was to ensure equal or better quality of life to all those impacted by the Project compared to the pre-existing conditions. According to the Socioeconomic Monitoring Program, run since the beginning of the Belo Monte Project, one of the indicators of the project's investments is that, between 2010 and 2015, the number of people living below poverty line in Altamira was reduced from 25% to 5%.

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CLASSIFICAÇÃO: PÚBLICO

Centrais Elétricas Brasileiras S.A.

PR

Rua da Quitanda, 196 - 24º 20091-005 Rio de Janeiro - RJ Tels: (21) 2514-6101 / 6001 [e-mail]

Also worth mentioning, for your appreciation, is the fact that 96% of the energy generation capacity of Eletrobras is clean, mostly renewable, and that the Company has been recently readmitted to B3's Sustainability Index, the most highly regarded index in Brazil, a recognition of our commitment to high standards of ESG, which is audited by an independent audit firm.

Considering that the decision to exclude Eletrobras was not fair, as it was based on inaccurate and outdated information, we hereby request such recommendation to be reviewed and that a new evaluation shall merit your distinguished attention based on more up-to-date data. For that, we, Management and Board of Directors, place ourselves at your entire disposition.

Yours sincerely,

WILSON PINTO FERREIRA JUNIOR:012217298 10

Assinado de forma digital por

WILSON PINTO FERREIRA JUNIOR:01221729810 Dados: 2020.05.18 14:33:13 -03'00'

Wilson Ferreira Junior

Chief Executive Officer

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CLASSIFICAÇÃO: PÚBLICO