The energy crisis never occurred, says minister

For the Minister of Mines and Energy, Bento Albuquerque, the energy crisis never occurred. Given the water shortage, the government preferred to avoid rationing and accelerated the pace of auctions (for energy, capacity and transmission lines).

This decision led the country to activate the park of thermal power plants at more than R$ 2 thousand per MWh (megawatt-hour), making electricity bills more expensive and causing inflation to rise.

According to the minister, the auctions generated R$ 680 billion in contracted investments, also considering oil, gas and mining offers.

“You can end the year with high self-esteem and rewarded for the work, which is not mine, it belongs to everyone”, said Albuquerque in an interview with leaf.

Even so, the government will permanently maintain the program to encourage companies to reduce consumption.

Next year “should be a better year” [do ponto de vista das chuvas] and, thanks to projects to expand the generation matrix, Brazil will be immune to water crises from 2026 onwards.

“We are going to go through any water crises with greater governance and without any surprises,” he said.

Albuquerque also said that there was no electoral intention of Bolsonaro, who will run for re-election in 2022, in the damming of tariff adjustments this year for the next, and that one of his missions [com o represamento das tarifas e repasse de custos da energia] it was to contain inflation, since the input came to represent the item that weighs most in the IPCA.

Businesses and people are installing Christmas lights. Is the energy crisis over?

The energy crisis, in my opinion, never occurred. We went through a period of water scarcity that resulted in an increase in the cost of energy generation and this affects all of our budgets. The Christmas lights and the resumption of companies simply show the return of economic activity.

During this period, the greatest water shortage the country has ever experienced, we sought to maintain energy security for all socioeconomic activities in the country.

What is the water scenario for next year? Are we going to continue with scarcity?

What we can say is that we will finish December this year in better conditions. [de chuvas] than we were in December 2021. And that’s pretty good. Now we can’t predict the turnout. Our forecasts are very assertive every two weeks. On a monthly basis it loses some reliability. We have to wait.

Has this more favorable water condition led the government to loosen its stimulus program to reduce residential and business consumption?

No. The Demand Response Program [empresas são pagas para não consumirem energia] it was very important and we intend to keep it. to Aneel [Agência Nacional de Energia Elétrica] is working on it with ministry guidelines and we believe that early next year we will have this permanent program. Whenever necessary and opportune for companies, it can be used.

Now, I would like to emphasize that, even with the pandemic and all the restrictions, we had a 16% increase in energy generation in the last three years, between January 2019 and December 2021, and a 17% increase in transmission. Oil production increased 16% and oil exports grew 22%. We held 20 auctions for electricity, seven for oil and gas, and eight for mining. Were
BRL 680 billion in contracted investments, which represented 81% of PPI’s infrastructure portfolio [Programa de Parceria de Investimentos].

We held successful energy auctions. We had wonderful premiums, an average of 250%. [em um deles] There was an expectation of receiving R$ 140 billion for the sale of oil from the Union. With the premium, we will receive R$ 320 billion.

We held the first 50 GW reserve capacity auction [gigawatt] of pre-approved gas-fired thermoelectric projects. This shows that not only is our energy matrix growing, but there is also a resumption of economic activity due to greater energy demand.
You can end the year with high self-esteem and rewarded for the work, which is not mine and belongs to everyone.

We had a pandemic, 2022 will be the election year, Bolsonaro is a pre-candidate and has been trying to win voter sympathy with positive impact measures. Did he ask you or Aneel for the imposition of tariffs and energy prices?

This I hear from him since 2019 [primeiro dia do governo], for us to take action [relacionadas à tarifa] that do not impede socioeconomic activity. This is permanent. For 2022, we are going to do the same thing we did in previous years.

But during the pandemic, the government and Aneel postponed the payment of sector charges and bills as a way of giving breath to the population and companies that were facing the financial crisis. Much of this liability will be diluted for tariff adjustments in the coming years. Was there a political connotation in this movement aiming at the 2022 elections?

There is no political connotation. What exists is a great concern with inflation, which could limit the resumption of economic activity.

The cost of energy is what weighs most on inflation. How much, after all, are the government and Aneel going to hold back in readjustments this year for the coming years?

We do not know. This is being calculated by technicians from Aneel and the Ministry. Therefore, by the way, we still do not present numbers in this last MP [medida provisória, que definiu uma segunda rodada de socorro às distribuidoras].

Since 2019, we have taken several actions so that the impacts on tariffs are not significant for both the consumer and companies.

[Na pandemia] We had a cost increase due to thermoelectric generation and energy imports and this directly impacted the tariff. However, we have taken measures that will reduce this increase, such as the expansion of generation and transmission lines.

Energy sources today are showing values [por megawatt-hora] smaller and smaller at auctions. And when I say that there was a 50% discount [no penúltimo leilão] means that the consumer will pay BRL 3 billion less [nas tarifas]. This added to the BRL 5 billion [que virão da capitalização da Eletrobras] will make the fare cheaper and cheaper.

This [redução das tarifas] it is a permanent job that will never end, whether in this or the next government.

One of the criticisms of the crisis management was the drop in the price of energy in the market when the country was activating the thermal plants at more than R$2,000 per MWh. How do you explain this situation?

This is the distortion that exists in the physical guarantee [quantidade potencial que uma usina se compromete a comercializar energia], mainly in the Eletrobras hydroelectric plants, which have a very large share in the country’s generation. in capitalization [da estatal] this warranty will be reviewed.

This was a complaint from large consumers and a relevant question from TCU. Will these distortions really be corrected before capitalization?

They are already being revised. There is a commission dealing with this and it is ongoing. And that started in 2020, due to an industry need. We are paying this cost [elevado] due to the physical guarantee of those Eletrobras plants that have very large losses.

Will this reduce the value of Eletrobras in the capitalization?

The plants will no longer generate by quotas [pré-definidas], as in the past, and will be able to sell the energy that is produced and not what, in theory, would have available. This, in a way, eliminates the issue of physical guarantee.

Faced with so many questions from TCU [Tribunal de Contas da União], will it be possible to carry out the capitalization next year?

Minister Vital do Rego asked to see the process [julgamento ficou paralisado], but TCU was concerned about keeping to the schedule. I believe that in January, when there is the next TCU plenary, we will have all the conditions to provide the required clarifications and this process will follow its normal course so that we can capitalize in April.

Will Petrobras be privatized in this government?

In this government there will be no privatization of Petrobras. There is no study by the ministry in this regard and this has been said recently even by President Bolsonaro.

The president always signals that he interferes with Petrobras’ prices. A few weeks ago, he said the state-owned company would cut prices. After a denial, the company actually lowered prices. Mr. or does the president interfere with Petrobras?

Not if we wanted to. The company’s statute prevents interference in fuel pricing. Furthermore, around 20% of the fuels consumed in the country today are not produced by Petrobras. Are from competitors or imported. [Para reduzir o preço do mercado] we would have to move the market as a whole. What we need is to have more agents and public policies that avoid price volatility.

What public policy does mr. defend in this case?

There is a discussion in Congress about the creation of a price stabilization fund, something that could be used to offset eventual tax revenue losses by the states.

What is your opinion about the fund?

The fund is important, but there will be no resources needed immediately. If you look at it, the collection has grown a lot in recent years. It could work on the tax issue, not to reduce revenue, but that, with the increase in fuel costs, it could reduce the tax margin in order to have greater stability. I believe it would be a tax mattress. This is the fastest way to avoid volatility.

Was this mechanism also discussed with Petrobras to guarantee fortnightly readjustments by the state-owned company, for example?

Not with Petrobras. Forget it. We are working with Congress. The Chamber assessed the ICMS, which is now in the Senate. In my view, it is the quickest way to avoid price volatility without changing the state’s revenue perspective.

Petrobras’ gas monopoly ended, and now private groups are trying to create local monopolies. Will the government react?

The opening is taking place. In 2021, only one company [a Petrobras] acted. In 2022, we will have eight companies, four of which are national. The market is opening, but this is not overnight.
With regard to the monopoly, one of the principles was to withdraw Petrobras from the market with the divestments [venda de empresas] which are monitored by a committee within the CNPE [Conselho Nacional de Política Energética] and by Cade [Conselho Administrativo de Defesa Econômica] to avoid transferring a state monopoly to a private one.

The regulatory agency in São Paulo clashed with a decision by the ANP (National Petroleum Agency) and this could open space for a private monopoly in the state. How can situations similar to this one be pacified and that can compromise openness?

If no consensus is reached, we have the Judiciary to arbitrate. This is the natural path for any divergence in terms of competences and attributions.

When will we be immune to water crises?

The year of inflection will be 2026. It is not an opinion. It is based on the expansion of our energy matrix, not only through diversification [entrada de novas fontes geradoras], but for the entry into operation of these gas plants that we auctioned [leilão de capacidade de reserva]. As part of our planning, from 2026 onwards, we are going to go through any water crises with greater governance and without any problems.

Until then, will the price of gas to move these plants be low or will we continue to pay more than R$2,000 per MWh?

It will be lower for sure. The route [de transporte] of the gas produced in the pre-salt will come into operation at the beginning of next year and all the gas will be able to be transported to the continent. We have new investments announced, such as Equinor’s, to bring this gas. In four years we will have this gas arriving and by 2030 our production will grow two and a half times.

Mr. will be the minister until 2026?

(Laughter). As long as President Bolsonaro wants.

Bento Albuquerque, 62

Minister of Mines and Energy, he joined the Navy in 1973, graduating from the Naval College. He reached the top of his career as a squadron admiral. He served in various positions. He has already been a military observer for the UN Peacekeeping Forces, assumed the Secretariat of Science and Technology and Innovation of the Navy, in 2006, and, later, the General Directorate of Nuclear and Technological Development. Participated in the Brazilian nuclear submarine program