Brazil's energy ministry to push several initiatives in 2018

Thursday, January 18, 2018

Brazil's energy ministry has created a working group to foster private investments in local refining and petrochemical industries. The basic goal is to guarantee that the country's demands for fuels are met in the coming years, the ministry said.

The initiative is part of the Combustível Brasil program, started in 2017, to rethink the fuel sector. A key result was the approval of Brazil's national biofuel policy, known as RenovaBio.

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Besides the fuels segment, the federal government is working on the development of improvements in other oil and gas areas as well as in the electric power sector. Here is a list:


Natural gas: The Gás para Crescer (Gas to Grow) initiative aims to increase competitiveness by opening up the market and align policymaking with that of the power sector, among other goals.

The program is currently being discussed in congress under a proposed law project. "I hope I will be able to celebrate this victory during the first quarter of 2018," energy minister Fernando Coelho Filho said in December 2017.

Onshore E&P: Also in the oil and gas sector, Brazilian authorities are elaborating measures to foster local onshore exploration and production activities through the Reate program.

Started in January 2017, the initiative aims to triple onshore domestic output by attracting new players and creating a more competitive industry.

The final report of the program's coordination team was published in October last year (accessible in Portuguese here). In a proposed next step a new committee would follow up on the implementation of the proposals presented in the report.


Eletrobras: One of the energy ministry's biggest moves underway relates to the proposed reforms of Brazil's electric power sector, designed to improve the industry's legal, institutional and regulatory framework.

The planned changes, expected to lead to the privatization of state-run electric firm Eletrobras, are currently evaluated by lawmakers.

Despite growing opposition, the federal government expects to have the reforms approved by mid-2018, before the general elections later this year.

Energy account: Another item being addressed is the reduction of subsidies and grants by the country's energy development account (CDE).

CDE is a fund controlled by watchdog Aneel, with resources being disbursed for energy development projects. Aneel has used the fund to help bail out distributors, which accumulated heavy debts due to the hydroelectric crisis resulting from severe droughts.

The issue has become an obstacle for Eletrobras' privatization as the state-run company maintains its indebted power distributors have 8.5bn reais (US$2.6bn) to receive from CDE, whereas Aneel claims they owe CDE 4bn reais.

The final report on CDE's expenditures structural reduction plan is due in April.