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16 APRIL 2004 - Brazil's national development bank BNDES has given Sao Paulo state-owned power generator Cesp until May 15 to meet a 24.2mn-real ($8.4m) interest payment, the bank said in a statement Tuesday as reported by Business News Americas. The previous deadline was April 15.

The payment stems from a September 2002 deal in which the BNDES bought a 1.66bn-real debt that Cesp owed the federal government. The federal government loaned the BNDES the cash to buy the debt and guarantees Cesp's debt to the BNDES.

The BNDES granted the one-month extension in meeting the interest payment because Cesp is negotiating a new loan with the federal treasury, funds from which would be channelled through the BNDES. One of the conditions of the loan under negotiation is that Cesp cannot be in default with BNDES.

According to local press reports, the new loan is for 1.2bn reais and is expected to be approved imminently.

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