Decree, sent by the Ministry of Mines and Energy to the Civil House 1 month ago, is undergoing final adjustments and will be submitted for approval by the president before publication
The president Luiz Inácio Lula da Silva (PT) is expected to give the hammer this Tuesday (June 18, 2024) on the decree that deals with the rules for renewing electricity concessions. The draft text was sent by the Ministry of Mines and Energy on May 23 to the Civil House.
Lula will meet at 5pm at Palácio do Planalto with ministers Alexandre Silveira (Mines and Energy) and Rui Costa (Civil House). The final text of the decree will be presented to him. If the PT member gives the approval, the final version should be published this week in the DOU (Official Gazette of the Union).
On Tuesday morning, Silveira was called to a last-minute meeting at the Civil House. According to the Power360the objective is to make the final adjustments to the text to take it to Lula.
The decree will deal with the general rules for renewing distribution contracts. The extension will be evaluated individually by the Aneel (National Electric Energy Agency) in accordance with the guidelines to be established by the government.
From 2025 to 2031, the contracts of 20 distributors come to an end. When the concession is renewed, companies will be required to annually prove their financial health using an index that considers the profit and debt ratio.
They must also meet more stringent service quality indices that will be established in the contract, such as the frequency and duration of interruptions in energy supply.
If these items are not complied with, punishments will be applied to the distributors. One of them will be to limit the distribution of dividends to shareholders of these companies to the minimum possible, which is normally 25% of net profit.
WHAT IS AT STAKE
From 2025 onwards, a series of energy distribution concessions will come to an end, starting with companies EDP Espírito Santo, Light It is Enel Rio. There will be 20 distributors affected by 2031, which serve more than 55 million consumers (64% of the national regulated market) and have an annual gross revenue of more than R$3 billion.
These companies were privatized in the 1990s, under the government Fernando Henrique Cardoso (PSDB) and obtained contracts for 30 years. The government chose not to automatically renew contracts and analyze each case on a case-by-case basis, but this requires establishing general rules.
The government’s expectation is that the concession renewals will enable investments of R$150 billion over the next 4 years.
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