Will birds of prey manage to devour Eletrobrás?

The country possesses large plateau rivers (major waterfalls) fed by abundant tropical rainfall, which maintain the world's largest freshwater reserve. This characteristic, over the years, has fostered the establishment of an essentially hydroelectric power matrix. This type of source accounts for approximately 61% of the country's electricity generation. Generation is the most complex segment within the electricity sector, as it is responsible for operating the power plants. Investments are high, including maintenance, equipment, technology, turbines, electrical components, and parts replacement. Furthermore, the segment suffers during periods of drought. Approximately 31% of this market is dominated by Eletrobrás.

In Brazil, the private sector already owns: 60% of installed power generation capacity; 39% of transmission (which interconnects the system); and 71% of distribution (which delivers energy to the end consumer). The privatization of the energy sector began with distribution companies in 1997, during the government of Fernando Henrique Cardoso (FHC). At the time, strong resistance, mainly from workers in public companies, immediately prevented the privatization of power plants, which was also FHC's intention. But today, 60% of generation is already privately owned, which is why they want to take over Eletrobrás. Some distribution companies have also remained public, largely thanks to the struggle of workers who, by the skin of their teeth, prevented the privatization of these companies (I have the opportunity to follow, to some extent, the struggle of electrical workers in Santa Catarina). 

The expansion of power generation in the last decade occurred through auctions to private companies. Most of these auctions were won by local groups such as Odebrecht and Camargo Corrêa. However, these large construction companies, which competed with American companies, were practically destroyed by Operation Lava Jato (a scheme orchestrated by the US State Department and now completely exposed). As is known, Operation Lava Jato was launched against Petrobras. However, as the process unfolded, the US also realized it could use the operation to eliminate private sector companies that competed directly with American companies.

Brazil's average electricity tariff is higher than that of other countries. According to the 2019 Global Petrol Prices ranking, Brazil has the 37th highest electricity tariff in the world, in a list of 110 countries (almost in the highest price third). It is behind developed countries, but with higher prices compared to those at a similar level of development. Comparing this to 2020, and adjusting for Purchasing Power Parity, the relationship remains the same, with the country in a better position than most developed countries, but worse than countries like Poland, South Africa, China, Mexico, India, among others. What is the problem with this ranking? The fact is that Brazil has conditions that ensure it has very low energy production costs. 

According to experts, we pay not the price for the hydroelectric power produced in the vast majority of our country (61%), but the equivalent of producing energy using coal, oil, or natural gas, as is the case in other countries that do not have abundant natural resources like us. In this respect, electricity is similar to petroleum derivatives. Brazil is an oil powerhouse, capable of prospecting, drilling, extracting, refining, and distributing oil, as demonstrated by the discovery of the largest oil field of the third millennium, announced in 2006. But this makes no difference whatsoever to the well-being of the Brazilian people. Because the domestic price of fuels is tied to international oil price fluctuations and the dollar exchange rate, Brazilians pay for petroleum derivatives as if they received their salaries in dollars. 

According to the Brazilian Association of Energy Traders (Abraceel), residential electricity bills rose by 114% between 2015 and 2021, while overall inflation accumulated a 114% increase. This represents more than double the IPCA (Brazilian Consumer Price Index). According to the Association, during the period in question, residential electricity saw an average annual increase of 16,3%, while the IPCA showed a variation of 6,7% per year. In addition to the cruel impact on the budgets of the poorest and the 74 million residential consumers in urban areas, approximately 4,5 million Brazilian farmers also pay the absurdly high tariff. Since agricultural activity requires a higher consumption of electricity, the direct consequence is an increase in food production costs.

Scholars estimate that a cartel formed by 15 business groups controls the electricity industry in the country, that is, it owns the production units, power plants, transmission lines, and distributors that market and deliver electricity to almost 80 million consumer units in Brazil. These are the groups that finance parliamentarians to defend their interests in the National Congress and advocate, for example, the privatization of the sector. These are the true owners of the wealth, who are behind these corporations that plunder and pillage the country. They are Brazilian and foreign private banks, as well as national and international investment funds. These are institutions concerned only with profits, without any commitment to providing adequate energy for the majority of the population. 

The high cost of energy for end consumers leads to the bankruptcy of small and medium-sized businesses, forces entire families out of the countryside, closes the doors of commercial establishments, eliminates jobs, causes widespread unemployment, deepens our dependence, and pushes more families into conditions of survival below the poverty line. The tax levied on electricity tariffs (ICMS, PIS, Cofins) is 33,17%. This tax is absolutely regressive because it does not discriminate between consumers, and those who pay the most, in relative terms, are the poor. For a rich person, an average monthly bill of R$ 300,00 makes no difference; for the poor, the average tariff (around R$ 150,00) is a real blow to the family budget. 

The big birds of prey that seize Eletrobrás won't need to build anything. They'll take over ready-made power plants, installations, networks, etc., a real goldmine. Let's pay attention for a moment to Eletrobrás' net profit in recent years:

2018: R$13,3 billion

2019: R$10,7 billion

2020: R$6,4 billion

2021: R$ 4,1 billion (1st Semester)

It's net profit "straight into the veins" of the Treasury and the state-owned company. What government, in its right mind, would hand over such an asset, strategic from every point of view, and which generates a river of net profit every month? The answer is: only a sell-out government acting against the interests of Brazil.  

The companies that acquire Eletrobrás will not build anything, nor will they hire anyone. On the contrary, they will take over a lean patrimony with previously made investments, as always happens in privatizations. In the conversion of a state-owned company to a private one, the automatic increase in tariffs goes straight into its coffers, pure profit. Can anyone believe that Paulo Guedes, who wants to privatize Eletrobrás and other state-owned companies at any cost, is interested in the good of Brazil? This is the same man who was caught red-handed with millions of dollars in tax havens, therefore without paying a penny in taxes on the profits to Brazil. Can you imagine that a person like that, who makes money from the very economic policy he himself coordinates, would be capable of worrying about the interests of the country at any point? 

Eletrobrás, with its 47 hydroelectric plants, owns some of the best energy generators in the country, including Tucuruí and those in the São Francisco River basin. It dominates 31% of the Brazilian electricity sector and has 71.000 km of energy transmission lines, which corresponds to practically half of the network's extension in our country. It operates in the generation and transmission segments, but does not have distribution companies. Everything it produces is to be sold to those who will put the energy into people's homes and charge for this service. And they are working to hand the company over to international capital on a silver platter. 

According to a study by FGV (Fundação Getúlio Vargas), after the 2016 coup, there were more than 15 mergers in the electricity sector, totaling almost R$ 86,2 billion in company value. Of this total, R$ 80,5 billion (more than 93%) represented acquisitions where the buyers were foreign companies. This data shows the direct relationship between privatization and denationalization. Having a complex electricity system handed over to multinationals is a huge problem for the country. Aneel (the National Electric Energy Agency), to oversee this entire continental system, has 300 employees. The US Electricity Regulatory Agency alone has 1.500 employees, and each state in the country has an electricity sector agency. 

The government will privatize Eletrobras after a series of public investments in the sector, especially those made before the 2016 coup. Many of the investments made in stations and lines will likely appear post-privatization as if they were major private sector projects. This is an unbelievable aspect of privatization in Brazil; there is no bourgeoisie more subservient to international capital than the Brazilian one. Alongside banks, energy companies were among those that obtained the most profits in previous years. And, because they are mostly foreign-owned, all the profit is remitted to the companies' country of origin without being reinvested in Brazil. Our great hydroelectric potential commands very high tariffs and, due to its internationalized structure, drains all the profit out of the country. 

Unlike Brazil, the United States, China, and Canada maintain dominance in the electricity sector. In the US, most of it is publicly controlled by the federal government, largely by the US military itself. There, the Army Corps of Engineers is the largest operator of electricity in the country, controlling the large John Day, The Dalles, and Bonneville dams. In China, the state-owned Three Gorges Corporation controls the world's largest hydroelectric dam, the Three Gorges Dam. In Canada, the sector is controlled by companies owned by provincial governments, similar to Brazilian state governments.

Eletrobras owns 47 hydroelectric plants responsible for 52% of all the water stored in Brazil. About 70% of this water is used for agricultural irrigation. Imagine all of this in the hands of a private, foreign company only interested in profit? A hydroelectric plant should never be privately owned because it holds the "key to the river." It stores water so that during droughts it can be transformed into energy. But every drop used in the transformation of water into energy is a drop less for the water supply.

Experts predict that the privatization of Eletrobras will also impact the employment of workers in other sectors (for example, tourism) who depend on water-related activities, since hydroelectric plants control the flow of many rivers. It's a universal law: wherever a public electricity company is privatized, price increases are guaranteed. Consumers will have no alternative, and without guarantees of quality service and investments from private companies, there could be future power outages.