Request for review postpones TCU’s decision on privatization of Eletrobras

The TCU (Court of Accounts of the Union (TCU) postponed the decision on the privatization of Eletrobras for a week. The process was paralyzed this Wednesday (15) with a request for inspection by minister Vital do Rego.

“O MME [Ministério de Minas e Energia] it did not make it clear what the tariff impact will be when privatization takes place,” Vital said during the plenary session.

For him, there are calculation problems in the value of the grant bonus (BRL 23.2 billion) that will be paid by Eletrobras plants that will no longer operate under a subsidy and quota regime, migrating to the free environment, in which the price of energy follows the rules of the market.

Minister Walton Alencar considered that it would be prudent for the process to be presented at an extraordinary meeting to avoid the erosion of share values ​​and a delay in the privatization timetable.

“The market is understanding that TCU is blocking the privatization of Eletrobras,” said Alencar.

The government hopes to sell Eletrobras shares on the stock exchange in May.

After the vote of the rapporteur of the process, Minister Aroldo Cedraz, Vital do Rego listed many controversial points open and asked for more time to analyze the case.

In his vote, Cedraz presented a series of questions about the model defined by the BNDES and which, according to the minister, could put the consumer’s pocket at risk.

Cedraz would present the report and his vote last week, but received a letter from opposition deputies suspected of irregularities in the privatization process of the state-owned energy company in the morning of the plenary session and, therefore, removed the case from the agenda.

A delay of one week does not mean a setback for the Jair Bolsonaro (PL) government’s plans to hold the auction —sale of shares held by the Union on the Stock Exchange— in May 2022.

Part of the TCU ministers want to help the government to carry out the sale of control of Eletrobras, a project that has dragged on since the beginning of the government of former president Michel Temer (MDB). Others believe that there are serious problems that need to be better discussed.

The rapporteur’s proposal was to slice the process into phases, something that could make the auction unfeasible in the first half of 2022. For the government, this will be a bad scenario because, starting in April, the electoral campaign will already be taking to the streets.

Cedraz proposed that, in a first stage, issues on which there is consensus should be voted on. An agreement has already been reached, for example, on the price of energy in the short and long term — BRL 233 per megawatt-hour (MWh) and BRL 172 per MWh, respectively.

The mandatory application of resources in the recovery of hydrographic basins and riparian forests, primarily from the São Francisco River, is also not discussed.

However, it is not known about the environmental impacts that will result from this process, nor the exact situation of each river basin, something that, according to the minister, is still being prepared by the MME (Ministry of Mines and Energy) and by the MMA (Ministry of the Environment).

In the list of problems, Cedraz especially listed technical issues such as the value of physical guarantees and the power of hydroelectric plants, something that would have led to an overvaluation of Eletrobras’ price of at least R$ 10 billion.

The minister also questioned the anticipation of R$ 5 billion of resources resulting from the privatization to contain the readjustment of energy in the next year, and even if the process will in fact be conducted in such a way as to guarantee the maintenance of the price of the electricity bill.

This tariff reduction will occur through a deposit in the CDE (Energy Development Account), which, at the end of the privatization operation of the state-owned company, will have R$29 billion. A portion (R$ 5 billion) would be anticipated to reduce the price of energy in 2022, an election year.

Also, as the leaf, the biggest generators and the main energy consumers sent a letter to the MME, BNDES and EPE (Energy Research Company) to complain that the Eletrobras privatization model considers data that will allow the government to receive between R$ 10 billion and R$ 20 billions more than due in the share sale process, scheduled for next year.

This difference is due to a drastic reduction in the amount of energy that Eletrobras’ hydroelectric plants were able to sell during the water crisis (about a thousand megawatts) and which was not taken into account in the calculation of the value of the business.

The MME is reassessing these distortions and the issue is one of the main ones to be questioned by Cedraz. According to reports, for the minister of TCU, there are doubts about the additional gains that Eletrobras’ hydroelectric plants may soon have with the sale of capacity ballast (power).

It is these doubts that led the technical area of ​​TCU to recalculate the value of the operation with a 9% discount — instead of R$ 62.4 billion, the deal would be R$ 56.8 billion. With the reduction, the grant bonus would drop from R$23.2 billion to R$21.4 billion.

“If the mills accept to pay R$23.2 billion in bonuses to the government, it is because they are aware that the investment [para migrarem os contratos para o mercado livre] it will have a return,” said Cedraz. “The interests of the Union must be aligned with those of consumers, of taxpayers.

For this reason, the minister asked for more detailed studies from the Ministry of Mines and Energy showing what will happen to tariffs if the concession bonus is R$23.2 billion.

Court technicians say Cedraz is opposed to a new move by the government in such an important privatization. They mention the discussions on the auction of 5G telephony, in which the Minister of Communications, Fábio Faria, pressured Minister Raimundo Carreiro, the rapporteur of the case, so that the technical area could hand over the process for voting in the plenary in 50 days after it was sent. by Anatel (National Telecommunications Agency).

In the end, the ministers formed a consensus on the proposal sent by Anatel, going against several points in the technical area of ​​TCU itself. On the occasion, Cedraz asked for a view, which paralyzed the vote for a few days, but ended up defeated.

The 5G was a political weapon for the Bolsonaro government and for Faria to dispute the next elections. Both needed the auction to take place this year.

The event brought new regional competitors to the market and generated nearly R$47 billion in bids with investment commitments for the massification of 4G across the country, in addition to connecting public schools with fifth-generation technology.

The rush, however, meant that schools were tied to the 26 GHz (gigahertz) frequency band, which is still little explored at a global level and which generates high operating costs.

Frequencies are airborne avenues through which telecoms make their data travel and whose right to use was won in the auction.

The result in the 26 GHz band was as expected: excess frequencies. Only half of the resources foreseen will be destined to schools, something around R$ 3 billion.