Benefit to J&F will be questioned in the Ministry of Mines and Energy
August 8, 2022 - CE Noticias Financieras
The debate seemed to have been closed, but it is back with force. The authorization for mbar Energia to use its thermal plant in Cuiabá, the Mário Covas, in place of four other gas-fired plants that have fallen behind schedule is formally questioned by Abrace (Association of Large Industrial Energy Consumers and Free Consumers).
mbar is the energy arm of the J&F group, which also controls JBS, a global company in the meat industry. The exchange of the enterprises was authorized on July 12 by Aneel (Brazilian Electricity Regulatory Agency), despite the contract prohibiting this type of operation.
Mario Covas thermal plant in Cuiabá (MT); the use of the plant to replace four other Ambar Energia projects is questioned - 19.05.22 - MT Government / Divulgacão
preparing to appeal to Aneel against the benefit, forwarding a copy of the document to the MME (Ministry of Mines and Energy), questioning the ministry about the issue and asking for a position.
According to Folha
, in parallel, the opening of a representation on the issue of Ambar in the TCU (Federal Audit Court) is under analysis. The agency is gathering information to identify possible irregularities and question Aneel.
The four thermal plants of mbar are part of a group of 17 plants that were contracted in October last year through the PCS (Simplified Competitive Procedure), an emergency energy auction. The projects should operate from May 1st of this year to December 31st of 2025. In case of delay in the delivery of the energy, a fine would be paid and the contract would be rescinded as of August 1st of this year.
A clause in the supply contract of these thermal plants requires that the energy be delivered by the thermal plant that won the auction and clearly states that it is not allowed to substitute any of them for any other plant in the system.
Of the total, 11 of them, including the four from mbar, did not start operating by the deadline, at the end of July, and have already been notified to provide clarification within 15 days to the CCEE (Chamber of Commercialization of Electrical Energy).
What is under discussion are billion-dollar amounts to be paid by energy consumers. According to industry estimates, the 11 thermal plants of the PCS that were not completed would raise the electricity bill by R$ 32 billion. The four thermal plants of mbar, taken over by the Cuiabá thermal plant, would be responsible for almost R$ 18 billion of this bill.
The National Front of Energy Consumers, an association of seven entities that will be formalized this week, released an open letter asking for the fulfillment of the public notice, which foresees the rescission of the contract in case of delay. This group of entities also asks for an official manifestation from the Minister of Mines and Energy, Adolfo Sachsida, to Aneel.
The minister has already said, in an interview to Jovem Pan's "Direct to the Point" program, that if a thermal plant of the PCS is not ready on time, he understands that the contract is broken.
He has also already sent correspondence to the agency questioning the benefit given to mbar and asking the agency for an opinion about the legality of the measure. However, as the decision had already been handed down, there was no technical space for Aneel to produce an opinion.
In the evaluation of sector specialists, heard by the report on condition that their names were not cited, in case Aneel does not revert the decision, there will be room for the ministry to act.
The measure would be unusual, because Aneel, as a regulatory agency, is an autonomous body. However, the industry's reading is that the agency extrapolated its competence by not complying with an auction rule, which is defined by the ministry, to benefit a private company.
To implement the measure that contradicted the ministry's rule, the rapporteur of the proposal, director Efrain da Cruz, adopted two premises.
First, although the Cuiabá thermal plant would substitute the other four plants, assuming their responsibilities in the PCS, the four thermal plants would be delivered on time, and would dump energy into the system. Second, the exchange of the four plants for Cuiabá would represent an economy for the consumer.
On the two occasions that the issue was evaluated by the board, mbar obtained the approval of the majority of the directors, initially in a provisional decision, and later in a definitive one. The arguments were considered valid by Sandoval Feitosa, Hélvio Guerra and Ricardo Tili. The only vote against was Camila Bomfim's. Giácomo Bassi declared himself ineligible to vote on the case.
Abrace's legal team believes that the two pillars of Efraim's proposal have collapsed.
The plants have already failed to supply energy by the deadline. In an isolated move as the deadline was expiring, Efraim still tried to secure another change in favor of mbar.
On July 30, he asked CCEE to centralize the reading of the four thermal plants in the meter of the Cuiabá plant. This type of measure is possible, but it needs to be analyzed by the technical area and approved by the board. It cannot be a monocratic measure.
Before granting the request, the president of CCEE, Rui Altiere, sent a letter to Aneel to make an additional consultation on the issue. The acting director general, Camila Bomfim, replied on August 3 that the board's decision did not include centralizing the measurement of the mbar thermal plants and that the procedures for reading the energy generation of the four projects should follow the criteria used for the other plants in the PCS.
Abrace also argues that there are no savings for consumers. All the gas-fired thermal plants in the PCS are expensive. They were authorized when there was drought and risk of rationing. Now they shouldn't even be in operation. And the use of the Cuiabá thermal plant in place of the four PCS projects does not change this, says the entity.
Data from Aneel itself indicate that the savings offered by mbar for the substitution would be R$ 500 million. Depending on the spot price of energy, an additional discount of R$ 300 million could occur. That is, in the best scenario, there would be a reduction of R$ 800 million.
The consumer would gain more if the contract were strictly adhered to, Abrace argues. In this case, consumers would be entitled to a fine of R$ 260 million per month, for a total of R$ 780 million, from May to July, and would not pay the almost R$ 18 billion, says the entity.
The expectation is that after the 15-day deadline for the presentation of justifications, all the thermal plants of the PCS that are behind schedule will claim the so-called excluder of liability.
This mechanism allows a company to claim compensation when it suffers an exceptional malice. In this case, companies tend to allege that they were victims of unforeseeable circumstances to justify the delay in the construction of the plants or the delivery of energy and to ask for an extension of the deadline.
One company is already ahead of schedule, the Turkish company Karpowership Brasil Energia. Its request for exclusion of liability is on the agenda of the board meeting this Tuesday (9).
mbar was not contacted by the report.
CENTRÃO MOBILIZA INDICATIONS AT ANEEL
The market perception is that the debate around the delay of the gas-fired thermoelectric plants, especially those of mbar Energia, even involving the Ministry of Energy and the Federal Audit Court, takes place in a context where the technical areas lose space and there is an advance of political influence in regulatory agencies
The agencies were adopted, at the turn of the 1990s to 2000, to monitor, on a technical basis, essential services to the population, especially companies and sectors whose state-owned companies were being privatized. Over time, however, the nominations and even reappointments of professionals, including experienced technicians, began to occur under the influence of parliamentarians and members of the government.
The evaluation is that many of these bodies are even being controlled, given the level of interference.
In the case of Aneel, the recent selection rounds counted with a greater participation of the so-called Centrão, the bloc that brings together representatives of different parties, which have in common the proximity to the Executive branch.
According to surveys carried out by the regulation area of different companies, which must deal with the agencies, the reappointment of the experienced technician Sandoval de Araújo Feitosa Neto and his nomination for director-general had the support of the Minister of the Civil House, Ciro Nogueira, a licensed senator (PP-PI).
It is known in the market that Senator Marcos Rogério (PL-RO), a strong ally of the Bolsonaro government, defended that the general direction should be given to Efrarin Pereira da Cruz, a fellow citizen of Rondônia.
As the suggestion did not succeed, the senator supported two other names, Ricardo Tili, who is also from Rondônia and has already been sworn in at Aneel, and Fernando Mosna da Silva, an advisor in the senator's office. A native of Rio de Janeiro, Mosna has been an AGU (Advocacia-Geral da União) attorney since 2012 and was a federal attorney in Rondônia.
Efrain, who cannot be reappointed as director, has Marcos Rogério's ex-wife in his office. In the market, comments are circulating that the possibility of Efrain acting as an advisor to Tili during the quarantine period is being analyzed.
The director Hélvio Guerra, another technician with a recognized curriculum in the agency, was reappointed with the support of Senator Eduardo Braga (MDB-AM). Also respected for her technical knowledge, Agnes da Costa, who takes over at the end of the year, received the endorsement of the former Minister of Mines and Energy Bento Albuquerque. The current acting director-general, Camila Bomfim, who will leave the directorship, had a technical career in the agency as a regulatory specialist.
Aneel's press office pointed out that there is an official rite for nominations. In the process, the Minister of Mines and Energy sends the name of the nominee to the President of the Republic, who, in turn, sends a message submitting the nominee's name to the Federal Senate for testing.
Only after the Senate test and approval, the nominee is appointed and takes office in the agency.
The advisory emphasized that the nominees must have technical quality. It pointed out, for example, that Sandoval Feitosa has been a career employee at the agency for 17 years and worked in inspection for eight years, was advisor to the board, superintendent of two areas at Aneel, one for regulation and the other for inspection, to then have his name nominated as director.
Likewise the director Hélvio Guerra, who was superintendent of concessions and supervision of the agency's generation and president of Aneel's Special Bidding Commission. Guerra was also superintendent of the agency from March 2001 to March 2019 and served in the Ministry of Mines and Energy as assistant secretary in the Secretariat of Planning and Energy Development.
Senator Marcos Rogério's advisory also highlighted Fernando Mosna's duties. "He is a recognized technician, with a curriculum to match the nomination, and that the political support is collective, because it depends on the approval of the names by the [Senate] committee," says a message sent to the report.
The minister Nogueira and senator Braga were not available for comment.