Light: It’s RJ or Aneel intervention, says Jerson Kelman – 05/12/2023 – Market

Engineer Jerson Kelman is one of the most respected experts in the energy sector and knows the risks on both sides of the counter —he was president of Light and general director of Aneel (National Electric Energy Agency). In his evaluation, if Light’s lawyers saw in RJ (judicial recovery) the way to protect the distributor’s cash, this is the way.

“They can’t allow the public service to collapse,” says Kelman.

A law prevents the distributor itself from making the request for RJ, and the group’s holding took over the request this Friday (12), raising discussions about the effect of the alternative for the sector’s legal framework.

“When Light itself asks RJ, via holding company, it is a preventive action”, says Kelman.

“This is an indication that the holding is a kind of guarantor of the distributor. Deep down, this is an attempt to protect the distributor’s cash. It is either that or an intervention by Aneel. Without protection, creditors would attack the cash”, he says. .

What’s going on with Light? Today there is a bad background for distributors in general, with a certain frenzy with the free market and GD [geração distribuída, especialmente energia solar]which lowers costs for some consumers, but increases for most of the captive market [onde estão grande parte das residências e pequenos comércios], which also increases default. We have this widespread problem, which stretches the cut for distributors in the country.

One of those affected is Light, then? Problems begin to pop up in the most fragile ones. Light, along with the distributor in Amazonas, are the most fragile, due to the problems we already know, non-technical losses [furto de energia, por exemplo]. But it was the arm wrestling between creditors, shareholders, administrators, shareholders and the population in general that led to the request for judicial recovery made by the holding company.

There is a law preventing distributors from filing for judicial recovery. This law, from 2012, dates back to Grupo Rede. The holding of the Rede group entered RJ, and the concessionaires, under the holding, were healthy. The concern, then, was that the holding company’s problem did not harm the companies’ operations. The distributor is the gateway to the electrical system, so [tem] the idea of ​​her not being able to ask for RJ. It seeks to protect the sector, which is all interconnected, from a systemic effect.

Here the opposite is happening. The debt is with the concessionaire, and the holding company is trying to avoid an extremely serious situation.

As O problem could it evolve? Panic in the case of Light was installed after hiring Laplace [empresa de reestruturação] and with the contamination of the Lojas Americanas case. Light, then, sought protection from an injunction, which established a negotiation between the company and its creditors, and gave 30 days for the parties to try to reach a solution. The injunction could be neutralized, which would be catastrophic.

What is said in the market is that some creditors were very committed to trying to overturn the injunction. There could be a run on the distributor’s cash and it would be unable to operate. When Light itself asks RJ, via the holding company, it is a preventive action. Deep down, this is an attempt to protect the distributor’s cash. It’s either that or an intervention by Aneel. Of course, there’s a lot of bad stuff in there. You need to protect the distribution company, but this is also bad from the point of view of the capital market. A situation that suggests risk of losses for creditors is not good for the country.

Some specialists saw the measure, as it was done, as a maneuver that violates the law. Neither Light’s nor Aneel’s administrators could allow the distributor’s cash to be attacked. They have to look for some way out. If the lawyers understood that there was a chance of this happening, responsibly, Light needed to act to protect the distributor’s cash. And Aneel needs to have the same concern. They cannot allow the public service to collapse.

There are those who say that Light’s situation was aggravated because the Ministry of Mines and Energy is slow to present the rules for an eventual renewal of concessions. Light’s concession expires in 2024, along with a group of 20 concessions, and the renewal and its parameters are vital for creditors to negotiate the debt. Yes. The delay gets in the way. If the decision is not to renew, it is better to intervene soon.

Minister Alexandre Silveira [Minas e Energia] criticized the way Light conducted the negotiation. I also have criticisms of Light. In some managements, she worked to increase revenue, but not receipt. How is that? It encouraged outsourced teams to do what is called TOI, regressively fine — charge back — those who stole energy. Some abuses were made, which led to a flurry of lawsuits. There’s no point in increasing billing and paying more ICMS by issuing an invoice, if you’re not going to receive it. That is, Light has sinned in the past, but that is not why it is in this situation today.

Light, the ferry service, Supervia… public services in Rio are being harmed by the environment. The ministry needs to resolve the legal framework soon, so that the distributors are not so fragile and decide soon the conditions for the renewals of the distributors. If the decision is not to renew Light, it seems to me that the best thing is for the government to intervene right away. I am in favor of renewal. The federal government needs to look ahead and tidy up the electricity sector, but it also needs to involve the state of Rio in this matter.

What would be the role of the state of Rio de Janeiro? Light is unable to receive electricity in many locations. Losses are in these areas. Tougher repression is needed. I’m not even talking about militia areas, but in areas where they manage to enter, theft is also high. We need to start putting some people in jail for stealing energy.

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X-RAY,
Jerson Kelman, 75

Civil engineer, Master in Hydraulics and Doctor in Hydrology and Water Resources, from the University of Colorado. He was the first director of ANA (National Agency for Water and Basic Sanitation). He also commanded Aneel (National Electric Energy Agency) and the Light, Enersul and Sabesp groups. He is a retired professor at Coppe-UFRJ and author of the books “Floods and Hydroelectric Uses” (1987) and “Regulator Challenges” (2009)