Reporting by Leticia Fucuchima

SAO PAULO
EnergiesNet.com 01 26 2024

A Brazilian court on Wednesday cleared a hurdle for the government’s renewal of concessions contracts representing 60% of the energy distribution market in South America’s largest country.

Brazil’s government has been working since 2022 on new guidelines over the extension of energy distribution contracts, but it has yet to release a final version, already affecting one concession.

On Wednesday Brazil’s court of auditors said that new guidelines would not need its approval, a decision which could help streamline concession renewals.

In a statement, Brazil’s energy and mining ministry said the court’s decision allows it to continue with the energy distributors contracts renewal process.

International energy groups, such as Italy’s Enel (ENEI.MI) and Portugal’s EDP (EDP.LS), are among the 20 concession contracts expiring by 2031.

Brazilian law says the government should formally express to companies that it intends to renew their energy distribution contracts no less than 18 months before the concession is due.

EDP’s contract in Espirito Santo state was the first one to miss this deadline last week. EDP’s CEO for Brazil, Joao Marques da Cruz, said in a statement sent to Reuters that the firm trusts Brazilian authorities and expects the contract to be renewed with no extra costs.

Meanwhile, Marcos Madureira, president at Brazil’s energy distributors association Abradee, said distributors “aren’t in a good” situation, as the uncertainty around concession renewal can affect new investment decisions.

Reporting by Leticia Fucuchima; writing by Andre Romani; Editing by Brendan O’Boyle and Leslie Adler

reuters.com 01 24 2024