The Minister of Mines and Energy, Alexandre Silveira, declared this Monday (1st) that Enel’s electricity distribution contracts may not be extended. The speech took place after a meeting with President Luiz Inácio Lula da Silva and ministers Fernando Haddad (Finance) and Rui Costa (Casa Civil), to discuss the company’s service provision and the price of energy tariffs in Brazil.
I understand that Enel is a big problem in energy distribution in the country.
Alexandre Silveira, Minister of Mines and Energy
In Silveira’s assessment, the contract that is most at risk is that of the state of Rio de Janeiro, which expires in December 2026. The installment agreement in São Paulo expires in June 2028. “Of course, if the possibility of If Enel is not complying with minimum quality levels, its renewal may indeed be compromised, especially in Rio de Janeiro, which is the [contrato] that expires during our management”, stated the minister.
The government is studying improving regulatory requirements for energy distribution in the next concession contracts.
Silveira ordered this Monday (1st) the opening of disciplinary proceedings against Enel due to the blackouts recorded in São Paulo. According to him, the company did not pay any of the fines it received due to problems with energy distribution. According to the minister, the value of the penalties is approximately R$300 million.
The opening of the disciplinary process could lead to the suspension of the company’s energy concession, which has just under a month to respond to the ministry about the measure. The Minister of Mines and Energy has argued that Enel is unprepared to provide services to Brazilians. Given the potential expiration of Enel, the ministry itself could work on a new tender or re-nationalization of the energy distribution service in São Paulo.
In a statement, Enel stated that it “reiterates its commitment to the population in all areas in which it operates and will continue investing to deliver quality energy for everyone”.
Rates
At this Monday’s meeting (1st), the lowering of energy tariffs paid by Brazilians was also discussed. According to Silveira, it was the first discussion on the subject, which should continue on the agenda between Minas e Energia and Finance. The minister proposed at least four solutions to Haddad to reduce prices, ranging from the use of auctions by the state-owned company PPSA (Pré-Sal Petróleo) to the advance of resources from Eletrobras.
For Silveira, “there are several proposals on the table” and the subject “is not simple”. “Haddad demonstrated willingness to participate in discussions to seek a solution,” she highlighted. “I brought solutions, for example, the use of PPSA auctions, which raise oil resources, to finance the cost of energy; discuss the equalization between the free market and the regulated market in order to achieve tariff justice; seek space in the general budget of the Union to minimize the impacts of energy tariffs”, said Silveira.
Subsidies became part of the energy bill in Brazil, sacrificing the regulated consumer, the one who receives the energy bill at home
Alexandre Silveira, Minister of Mines and Energy
In relation to Eletrobras, the minister argued that the company does not “need to agree” with the advances. “There is no need to talk. These are Brazilian resources, which were committed when Eletrobras was capitalized. What we did was give, through a provisional measure, the Union the right to advance these resources to reduce the tariff impact”, he highlighted. This MP should be published in the next few days.
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