MP to reduce electricity bill by 4% should come out next week

The Provisional Measure to reduce electricity bills should be published by next week, and the monthly impact on Brazilians’ pockets should be at least 4%, according to the Minister of Mines and Energy, Alexandre Silveira.

The MP has the approval of President Luiz Inácio Lula da Silva (PT), and the reduction in the bill should happen soon after, according to Silveira. “The president gave ok, with immediate effect”, said the minister, without specifying dates for the issue of the measure, in an interview with CNN this Tuesday (2).

The minister referred to the MP for the government to receive R$26 billion in advance from the privatization of Eletrobras. This is a solution already signaled by the minister and which gained strength after a meeting on Monday with President Lula and the Minister of Finance, Fernando Haddad, to discuss how to reduce expenses for Brazilians.

Haddad said the government is concerned about the cost of energy in Brazil.

The amount will be used, in part, to pay interest on debts incurred in the last four years, during the pandemic and water shortages, which impacted the population’s electricity bills.

“The third fundamental (measure) is that we securitize the R$ 26 billion from Eletrobras and with this resource we can pay the Covid bill and the water scarcity bill, two bills contracted by former minister Paulo Guedes, at that time he could have used , including the PEC of war, but he preferred to look for it in the financial market, at very high interest rates. And this bill is now a bomb with a delayed effect that fell into the lap of Brazilians”, criticized Silveira.

How the operation works

Receiving money from Eletrobras is a market operation (securitization) carried out through the sale of receivables. In other words, with the MP, the government will be able to ask for a loan from the private sector with Eletrobras as a guarantee.

The MP, however, will also extend some subsidies that burden the end consumer. According to Estadão, the same MP postpones the start of renewable source projects that have discounts on transmission and distribution tariffs. The 36-month delay mainly affects the Northeast.

This increase, however, reflects in the energy tariff, on average, 2.4% and approximately R$6 billion per year. It turns out that these costs fall on the Energy Development Account (CDE), which is where the electricity bill subsidies are collected and is paid by all consumers. The government has not yet clarified this issue.