TCU minister’s proposal threatens Eletrobras privatization

The minister of the TCU (Union Audit Court) Vital do Rêgo should propose a recalculation of the bonus to be paid by Eletrobras to the Union and, if the determination is confirmed by the plenary, the government will face difficulties to complete the privatization of the state-owned company this year. .

The TCU plenary should meet to approve the first stage of the process next Tuesday (15), in the midst of a battle over the value of the grant for the renewal of hydroelectric contracts that today generate energy with a federal subsidy (regime of quotas).

Minister Vital do Rêgo should propose a determination for the bonus to be paid to the Union, calculated at R$ 25.3 billion, to be expanded to incorporate the capacity of rapid energy delivery by these plants at peak hours. The number, according to people participating in the discussions, is not yet closed, but will be much higher.

The so-called power, in the jargon of the sector, today does not integrate the calculations of the value of the grant, which would be underestimated in the evaluation of the minister’s office.

The government seeks to combat Vital do Rêgo’s thesis, but members of the court have shown themselves to be open to the minister’s argument.

In addition, the position of the newly sworn in Minister Antonio Anastasia is considered an unknown. When she was a senator for the PSD of Minas Gerais, Anastasia voted against the bill authorizing privatization.

There is concern behind the scenes of the court in calculating the value of the grant correctly, considering the power of the plants at peak times, so as not to cause damage to the treasury.

In defense of his position, Vital do Rêgo states that Aneel (National Electric Energy Agency) held, in December 2021, the first power auction in Brazil, which would support the inclusion of this product in the bonus calculation.

At the last meeting of the year, when this discussion came to light, the minister said that it was impossible to admit that this calculation was not made, under penalty of harming the consumer who, in a scenario of energy shortages like the current one, would have to bear these differences in the electricity bill.

Technicians from the Jair Bolsonaro (PL) government argue that there is no way to price this capacity and hope that the thesis will be defeated in plenary.

Behind the scenes, the minister’s proposal is considered absurd. According to a source heard by the leafwould be the equivalent of asking to incorporate in the estimates the effects of an eventual approval of the Income Tax (IR) reform that is still under discussion in the National Congress.

In early February, the government issued a note reaffirming the bonus calculation. “The Ministry of Mines and Energy and the Ministry of Economy reaffirm that the studies sent to the TCU reliably express the result of the grant value.”

The extraordinary general meeting of Eletrobras shareholders to resolve on the company’s capitalization – an operation in which the Union’s share will be diluted, and private shareholders will become the majority – is convened for February 22nd.

The government’s assessment is that the grant amount needs to make sense to shareholders, especially minority shareholders, whose approval is necessary to proceed with the operation.

Therefore, the TCU’s manifestation is considered essential to provide greater security for the next stages of the process, which include the modeling of the operation and the offering of shares. These steps need to be completed by May 13th.

The government’s expectation is that the thesis of the rapporteur minister, Aroldo Cedraz, which validates the value of the contracts at R$ 67 billion and the bonus to the Union at R$ 25.3 billion, as stipulated by the CNPE (National Energy Policy Council) will prevail. ).

Eletrobras will be capitalized through an offering of shares on the market, which will not be accompanied by the subscription of new shares by the Federal Government, currently the company’s controlling shareholder. With this, the government will have its participation diluted.

The money obtained by Eletrobras will be used to renew contracts for hydroelectric plants, in order to be able to sell energy at free prices. Today, these units operate on a quota basis, which is only sufficient for operating and maintenance costs.

In calculating the grant amount, the CNPE considers the average amount of energy to be delivered by the plant, regardless of the time of day and fluctuations in demand in the electrical system.

However, TCU technicians, during the analysis of the process, raised questions about the disregard of the power factor, which is the ability to make quick deliveries of energy in a short time.

At peak times, when the ONS (National System Operator) needs to quickly activate new energy generators to meet the demand, hydroelectric plants have a more agile response than other energy sources, such as some thermal, wind and solar.

Therefore, the power of hydroelectric plants is a valuable attribute for instantaneous delivery of energy at times of greatest demand.

The technicians of the court of accounts, however, later recognized that the regulatory framework for the electricity sector does not currently provide for this separation of elements, energy and power. In this sense, there would be no basis for including this factor in an expectation of future earnings for Eletrobras.

Technicians interviewed by the report stated that, although a first power auction was carried out by Aneel, there are still not enough parameters to safely establish the price of this product.

From the corporate point of view of Eletrobras, according to these technicians, it would be reckless to approve the payment of a grant to the Union defined based on these premises.

Another observation made behind the scenes is that, if, on the one hand, the separation of the value of power contributes to increasing the value of the bonus due to the Union, the same operation ends up devaluing the value of the energy product, since those who contracted power will have priority in the delivery. This would tip the balance in the opposite direction, and the final balance is considered an unknown.