President Jair Bolsonaro has sanctioned interim measure 1.031, which paves the way for the privatization of Eletrobras. The proposal received 14 executive vetoes, suggested by the Ministry of the Economy, the Ministry of Mines and Energy and the Union’s Advocate General. The vetoes and their respective justifications were published in the Federal Official Journal (DOU) on Tuesday (13).
Among the main points modified by the President of the Republic are the provision of benefits for the employees of the public company, the commitment of a possible surplus of the company which will manage Itaipu and Eletronuclear, and the authorization of a corporate restructuring of the Subsidiaries of Eletrobras.
Along with the sanction, there are at least five next steps to complete the capitalization of the state-owned company, as a report from Gazeta do Povo explains. The government expects the process to be completed by January 2022.
However, other elements criticized by industry experts ended up remaining in the proposal. As an example of the forecast for the procurement of gas-fired thermoelectric power stations and small hydroelectric power plants (PCH), a measure seen as an ‘spillover’ for the Brazilian Institute for the Environment and Renewable Natural Resources ( Ibama) and the Indian National Foundation (Funai) in granting licenses for the construction of the Manaus-Boa Vista power transmission line and the extension of contracts for power plants under the Incentive Program for alternative sources of electrical energy (Proinfa).
Benefits for Eletrobras employees
The approved congressman predicted that up to 1% of the remaining shares of the Union could be acquired by employees of the state-owned company. There was also a guarantee that any layoffs could be converted into shares, the price of which would be equivalent to the share price within five days of the publication of the PM. This process could be done within six months of the worker being fired.
For the economic team, the measure goes against the general interest. “The prior definition of an offer whose price would be set at a discount compared to what is practiced on the market could distort the pricing process for new shares to be issued and generate a reduction in the resources to be raised in the capitalization of the company », Specifies the ministry.
During the congressional affair, lawmakers also succeeded in including in the MP an obligation to the Union to reuse employees of the company and its subsidiaries who could be dismissed without just cause within the twelve months. following privatization. But the extract was also withdrawn by the president. The Economy and the General Prosecutor of the Union (AGU) argued that the measure violates the principle of public tendering, provided for in Article 37 of the Federal Constitution, and compromises the planning of enterprises of the federal state which could receive workers.
Without explaining in detail, the government also alleges that there could be a potential increase in expenditure, while it was expected that the employees of the public enterprise would be assigned to federal public enterprises, in positions of the same complexity. or similarity, with salary equivalence.
Any surplus from the company that will manage Itaipu and Eletronuclear will no longer be compromised
A proposal widely criticized by experts in the field, the forecast to jeopardize the possible financial results of the company that will manage Itaipu and Eletronuclear has been vetoed in the MP. The Ministries of Economy and Mines and Energy say the measure “is contrary to the public interest, considering that it could compromise the sustainability of the new public enterprise or economic company and would represent a potential reduction in income. Union primaries from possible future distributions. dividends from the said company ”.
“By linking budgetary revenue to the CDE for a period exceeding five years, the provision would be at odds with the provisions of art. 136 of Law No. 14.116 of December 31, 2020 – Budgetary Guidance Law – LDO 2021, and violates the provisions of art. 113 of the Law on transitional constitutional provisions – ADCT by not presenting an estimate of the budgetary-financial impact ”, state the files.
The Ministry of Mines and Energy, in turn, vetoed a provision of the PM which determined that the resources not committed on projects contracted until February 23, 2021 and related to projects rejected or whose execution has not been proven would be allocated to the Energy Development Account (CDE) in favor of low tariffs. The CDE is a fund to which distributors contribute, aimed at costing public policies and reducing prices.
Contradicting a speech of the government itself, the executive now claims that the measure goes against the “public interest”. During the proposal, the government said it would allocate a large part of the resources to the Account, in order to alleviate the energy bill. “[A medida] this would generate a loss of value for the Company, in addition to creating legal uncertainty by affecting decisions taken on the basis of the legislation in force ”, explains the MME.
Company restructuring of Eletrobras subsidiaries is authorized
Bolsonaro also vetoed the section prohibiting any possible extinction, constitution, merger or change of domicile of Eletrobras subsidiaries. They are: Chesf, in Pernambuco; Furnas, in Rio de Janeiro; Eletronorte, in the Federal District and CGT Eletrosul, in Santa Catarina. The veto on any changes would be granted for a minimum period of ten years.
Preventing the restructuring of companies, according to the Ministry of the Economy, does not improve the efficiency of the company and could limit the management of subsidiaries, in addition to removing flexibility from Eletrobras.
The text approved in Congress also fixed a period of two years for the execution of the transitional rules for the recovery of the levels of the reservoirs of the hydroelectric power stations in the hydrographic basins of the rivers Rio Grande and Paranaíba. But the government estimated that the time horizon could not be sufficient, because, “even with the effort provided by the electricity sector and the actors concerned, the complete recovery of storage would depend directly on the occurrence of rains in sufficient volume “.
Another point removed from the proposal was the determination of the directors of the National Electricity System Operator (ONS) to pass a congressional hearing, as happens with the directors of the National Electric Power Agency (Aneel). . Unlike the directors of regulatory bodies, the directors of the ONS do not fulfill the mandates and can be removed at any time, with the exception of the CEO.
The government argues that “this is contrary to the public interest, given that the ONS was established by law as a legal person under private law, in the form of a civil association, with legal personality. private law, the operation of which is protected by the Constitution. state interference ”.
“The prior approval of the Senate, condition which would condition the appointment of the president of the ONS, would directly interfere in the functioning of this association, in order to put the legal regime of private law into perspective, in particular because this prior control is a typical measure of the public, constitutional regime, provided for in cases where the legislative power exercises control over other powers, which would not be consistent with the present hypothesis, given that it is not a public function ”, the government adds. “It would undermine the efficiency of governance in the electricity sector, whose institutional model aims to ensure balance and reliability within an economic segment in which decisions must be based exclusively on technical criteria “.
Relocation of the population living in the bands of high voltage transmission lines
The approved MP also demanded that Eletrobras relocate any population within the range of high voltage transmission lines (equal to or greater than 230 kilovolts), within a period of up to five years after privatization. The process would be carried out with resources provided by the federal government’s Casa Verde e Amarela program.
The government vetoed the passage, arguing that it is “out of step with the overall nature of the Casa Verde e Amarela program, whose main objective is to promote the right to housing for families living in urban and rural areas. “. Without defining the exact origin of the resources, the proposal, according to the Executive, could have a negative impact on the operationalization of the program, “which suffered several budgetary and financial cuts throughout the year 2021”. In addition, the absence of an estimate of the budgetary and financial impact would constitute a legal obstacle to the measure.
“The legislative proposal goes against the public interest by creating a legal obligation not necessarily linked to the Eletrobras concessions, considering that these transmission lines could belong to other companies, including electricity distributors, so that Eletrobras, to fulfill this obligation, would act in the band easement of another transport concessionaire or would perform an action under the responsibility of a distribution concessionaire, which already has resources in its tariff to maintain the band of bondage of the assets that make up its remuneration base, which would have a negative impact for the State-owned company and, consequently, would reduce the attractiveness of its capitalization operation, ”argues the government.