Amazonas Energia case causes several surprises – 10/01/2024 – Jerson Kelman

The Amazonas Energia (AE) concession area is the national champion in the rate of non-technical energy losses (a euphemism for theft). With sagging revenue, AE became unsustainable, including failing to pay for the energy it purchases from Eletrobras thermal plants.

The government had to make choices. One possibility would be to intervene in the concessionaire or declare the concession to be forfeited. It would make sense if AE’s current difficulties were due solely to mismanagement. That doesn’t seem to be the case.

Another possibility would be to help the concessionaire, at least temporarily. Ideally, this aid should materialize as an expense in the Union Budget. However, given the country’s fiscal situation, realistically the cost of the aid will materialize, making the electricity bill of all Brazilians more expensive.

Should the help be given to the current or a new AE controller? The correct choice, in fact, was the second option. Who should be the new controller and how big should the aid be? The reasonable thing would have been to establish a competition between possible candidates for controller, selecting the one that offered continuity of service for Amazonians and minimum cost for consumers across the country. Instead, the government, it seems, chose Amber.

“Apparently” because, in a first move, Âmbar bought the “micadas” thermal plants from Eletrobras. Few understood. For Eletrobras, it seemed like an excellent deal to get rid of power units whose only customer, AE, was in default. But, for Amber… why make such a bad deal? The answer came shortly after the transaction, through the issuance of provisional measure 1,232/2024, which transformed the “micated” contracts between the thermal plants and AE into reserve energy contracts, with a guarantee of compliance. Official explanation for this sequence of events: mere coincidence. If so, Amber is very lucky!

The provisional measure also determined that Aneel would examine the share control transfer plan prepared by the duo AE-Âmbar and approve it if it was demonstrated that its implementation would lead to the recovery of the concessionaire’s economic and financial sustainability, with the lowest possible tariff impact. Aneel’s technical area examined the plan and rejected it, because it would increase the electricity bills of all Brazilians by R$16 billion. What is needed, according to Aneel technicians, would be only half of that amount.

AE went to court and obtained an injunction decided by a first instance judge of the Federal Court in Amazonas, giving 48 hours for Aneel’s board of directors to “immediately approve the plan for transfer of corporate control in the form presented… by the author… .”. That’s right: the injunction does not determine that Aneel decides on the plan, but rather that it accepts it as proposed, in an implicit manifestation of contempt for the technical knowledge of Aneel employees. Amazement!

Aneel’s board of directors met shortly before the injunction expired, but were unable to reach a decision. There was a tie between two positions. The government remains without appointing the fifth director who would have broken this and other decisions. Amazement!

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