Bolsonaro sanctions law that promises to open gas market and make energy cheaper – 4/8/2021 – Market

On Thursday (8), President Jair Bolsonaro signed the New Gas Law, which puts an end to Petrobras’ monopoly and modifies the legal and regulatory framework to promote competition in the country and attract investments in the order of R $ 60 billion to triple the production of natural gas in ten years in order to integrate it into the generation of national energy.

The new law comes into force almost two years after the launch of the program promised a “Cheap energy shock” with the end of Petrobras’ monopoly on natural gas – projects taken over by ministers Bento Albuquerque (Minas e Energia) and Paulo Guedes (Economy).

The new law integrates the gas chain into the electrical system. Under the new rules, industrial consumers will be able to buy directly from suppliers. Before, they had to be held hostage by the local distributors that bought the fuel basically from Petrobras. This will mainly help the cellulose, ceramics, fertilizers, petrochemical and steel industries.

With the new milestone, thermoelectric plants, which today account for adding energy to the system when it rains little and the plants do not produce enough, will be able to convert to natural gas (in the same way as automobiles). Today they are powered by diesel, which raises the price of the average MWh of energy to R $ 1,200, making consumer tariffs more expensive.

The new legal framework was sanctioned by Bolsonaro without vetoes and affects all links in the gas chain: production, transportation through pipelines, treatment, processing, underground storage, liquefaction, regasification and commercialization.

Projections from the Energy Research Company (EPE) indicate that, with the modernization of the sector due to the new rules, the sector will be able to generate four million jobs in five years and add 0.5% growth to GDP by 2030.

According to the Secretariat for Legal Affairs of the Presidency of the Republic, the Novo Mercado do Gás represents “the culmination of a sequence of Federal Government actions that gained momentum in July 2019”. The model was developed based on experiences from the United Kingdom and European Union countries.

To ensure regulatory balance in the country, the law harmonizes the regulatory rules of the states with the new framework and also promotes the removal of tax barriers.

Among the main innovations, we highlight the replacement of the concession granting regime with the authorization to explore natural gas transportation services and underground storage, which will reduce the bureaucracy for the expansion of the transportation network.

The law imposes isonomic treatment on all companies that need to access the transport pipelines for the passage of gas to their distribution infrastructures, such as production flow pipelines, natural gas treatment or processing facilities and liquefied natural gas terminals ( LNG).

The expectation of experts, however, is that effects on prices will still take time to occur. Practically the only supplier in the country, Petrobras announced on Monday (8) 39% increase in the price of fuel, passing on highs of oil and the dollar in the first quarter.

O advancement of private companies in the sector it occurs both for national production and in import initiatives, in addition to studies to expand the network of gas pipelines to allow new salespeople to deliver the product to their customers.

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