Eletrobras privatized, energy dollarized!

What lies behind the privatization of Eletrobras are billion-dollar, shady deals. In the first months of the Bolsonaro government, it leaked that groups outside the sector were preparing to negotiate a contractual change with the Paraguayan government to sell surplus energy outside the country. The haste drew attention, since the agreement ends in 2023. In the dead of night, without any responsibility to the country, billions of dollars were about to change hands. In Paraguay, the reaction was so strong that President Mario Abdo Benitez almost fell. In Brazil, as always, everything was hushed up: the so-called "silence of the innocent". (*)

With this history of breaking rules, or as former minister Ricardo Salles liked to put it – opening the floodgates – the privatization of Eletrobras in June 2021 began to fall apart. The provisional measure came full of "hidden clauses," including the creation of a new state-owned company to control the nuclear power plants and Itaipu. Furthermore, to the astonishment of sector experts, there was a requirement to contract gas-fired power plants. If you pay attention, the three situations I mention are moving towards the dollarization of electricity. This would be yet another major blow to the empty pockets of consumers. 

Furthermore, the tariff adjustments authorized by Aneel (Brazilian Electricity Regulatory Agency) are always above inflation, directly impacting all sectors of our economy: industrial, residential, commercial, rural, and public services. No one is spared. According to Vinicius Torres Freire, the privatization of Eletrobras will cause a cost increase of 40 billion reais in electricity bills. The main cause of the deficit, I insist, is the thermoelectric plants with market reserves, with high production costs, not to mention the construction of an extensive gas pipeline network in the north and northeast regions, the cost of which no one says. (FSP 11/6/21)

The government isn't talking about it, but the privatization of Eletrobras is a national tragedy. It will also contribute to the deindustrialization of the country, worsen unemployment, and undermine our competitiveness abroad. It's insane, showing no concern for the future. According to Joaquim Francisco de Carvalho, PhD in Energy from USP, "Almost all state-owned companies in the electricity system have already been privatized, with results opposite to those promised when they ceased to be state-owned. Instead of becoming cheaper, tariffs for the residential sector have risen by more than 55%, and those for the industrial sector, by about 130% above inflation." For some experts, the water crisis wasn't so serious, but it served to introduce so-called emergency adjustments into the consumer bill. The higher the tariffs, the shorter the payback period for investments made by the future owners of Eletrobras. (**)

(*) The sell-out negotiations took place in May 2019. Documents obtained by journalist Mabel Rehnfeldt show that Brazil actively worked for the approval of the new treaty – all in secret. According to the journalist, people close to the president participated in the wrongdoing, and the deal only fell through because the Paraguayan Congress threatened to vote on the impeachment of the current president.

(**) Last week, the Mataripe refinery in Bahia made the news. Under private management since December, it implemented three price adjustments in January and now sells gasoline and diesel at higher prices than Petrobras. Meanwhile, the private sector returned Galeão Airport. It wasn't delivering the promised return. Another Rio de Janeiro myth that turns into a fiasco. 

PS - Currently, the cost of electricity in Brazil is one of the most expensive in the world. The hydroelectric plants of Eletrosul, which now belong to Engie, for example, have a very low energy production cost, allowing shareholders to receive hefty dividends. Just as with Eletrosul twenty-five years ago, now the 22 hydroelectric plants of Eletrobras are being privatized. The big deal in privatization is offering assets below their real value. That's what the investor wants. On Tuesday the 15th, the Federal Court of Accounts, in an extraordinary session, overturned the dissenting vote regarding the government's calculations on the value added to the contract (VAC). With this, the government facilitated the lives of investors by 60 billion reais. There's no such thing as a free lunch; the bill for this energy folly – you, the consumer, will pay!