Rui Costa’s proximity to Suarez reinforces the gas lobby – 04/19/2023 – Market

Natural gas, extracted along with oil, is the target of an old tussle in Brazil between energy technicians and politicians who defend the interests of some companies. At the beginning of the third term of Luiz Inácio Lula da Silva (PT), politicians have gained ground. The reason, according to members of the energy sector, is in the Civil House.

Minister Rui Costa (PT) has helped streamline projects and indications to accelerate the use of gas. It draws attention in the energy sector to the fact that he has old ties with businessman Carlos Suarez, called by executives in the sector as “the gas man”.

Measures postponed for years were released with the support of the Planalto, including the brasduct, a network of gas pipelines that would pass through capitals and areas in the interior of Brazil, estimated at R$ 100 billion.

The brasduct is treated as a pillar for the only new program that the government managed to announce in the first 100 days: “Gas para Empregar”. In general terms, he proposes using gas to promote the reindustrialization of Brazil.

The brasduct was launched at the CNPE (National Council for Energy Policy) meeting, unusually attended by President Lula, in addition to Vice Geraldo Alckmin and five ministers —including Costa. Gas was treated as a priority, despite being fossil and questioned by environmentalists, and the government saying it prioritizes the green energy transition.

The proposal has a positive side. Some segments of the national industry, such as ceramic and glass manufacturers, petrochemicals and steel plants located in competitive areas for the use of gas could benefit. This explains, for example, the support for gas by Fiesp (Federation of Industries of São Paulo).

The gas pipeline program is defended especially by gas distributors interested in guaranteeing public money for the transport of the input. Different studies, however, show the financial unfeasibility of several stretches, as the cost of transport would be so high that it would make gas very expensive for companies or homes.

Suarez is the S of OAS, a construction company that he helped found in Salvador, in the 1970s, but which he later left. Now, he owns Termogás, which controls piped gas distributors in regions not yet served by gas pipelines.

In the Eletrobras privatization law, politicians linked to Suarez managed to include the requirement for the construction of 8 GW (Giga-watts) of thermal plants, as an alternative to justify the construction of gas pipelines and gas consumption in more distant regions, attracting strong opposition of electrical energy specialists. But the political group failed to make the gas pipelines viable.

The idea, already adopted by the government, is now to use PPSA (Pré-Sal Petróleo S/A) to form the new network of pipelines. This suggestion had been presented during the Bolsonaro administration to the then Minister of Mines and Energy Adolfo Sachsida, who took a back seat and vetoed it. His predecessor, Bento Albuquerque, also resisted the project.

On the last 6th, the Lula government took the first step towards carrying it out. An order published in the Federal Official Gazette determined that the PPSA has up to 180 days to carry out studies capable of “enabling the national supply of petroleum-derived fuels”.

A strong sign of support for gas and Suarez, according to an expert in the sector, was Costa’s insistence on nominating Efrain da Cruz, who is linked to the centrão and associated with defense, as executive secretary of the MME (Ministry of Mines and Energy). of the entrepreneur’s projects —such as the thermal plants provided for in the Eletrobras Law.

POLITICAL ARRANGEMENTS

The Minister of Mines and Energy, Alexandre Silveira (PSD), supports the gas pipelines, but because he sees another strategy. Before taking office, he was already sounding out the sector about ways to take the input to the Triângulo Mineiro and get a fertilizer factory off the ground. The use of gas in this activity is also already included in “Gas to Employ”.

Silveira aims to run for governor of Minas Gerais, and the fertilizer factory is a good platform. In part, say people close to the folder, that was why Silveira accepted Efrain as his executive secretary.

Silveira wanted Bruno Eustáquio in the position, a name blocked by the Civil House on the grounds that he had held a position of trust in the Bolsonarist administration.

Even respected energy experts in the PT tried to prevent Efrain from being hired because of his track record as director of Aneel (National Electric Energy Agency). The Civil House, however, insisted on the name. Efrain is a gas advocate associated with Suarez. His indication was poorly received even in the financial market.

Sought after, the MME recommended reading the disclosure text on the Gás para Empregar program. Efrain and Ámbar did not comment until the publication of this text.

wanted by Sheet, the minister declined to comment. Questions were sent to his advisory office about his relationship with Suarez, about business of interest to the businessman with the government of Bahia, about possible participation in the process of nominating Efrain for post number 2 at the Ministry of Mines and Energy and about what the head of the Civil House thinks about the proposals for the gas sector under discussion in the Lula government.

Suarez also did not respond to the report.

Suarez was close to Rui Costa during the government of Bahia

Relations between Suarez and Costa involve the businessman’s interests in matters under the responsibility of the state government, mainly those related to the real estate sector.

In October 2018, shortly after Costa was re-elected, the local administration renewed, with no bidding required, a lease agreement with Patrimonial Beaufort, a company that has Suarez’s wife as a partner.

Patrimonial has already earned at least BRL 4.9 million with the lease agreement for the current premises of the Commercial Board of Bahia, according to the government’s Transparency Portal. The Board was contacted by Sheetbut did not manifest.

In 2016, Suarez and his wife each donated R$100,000 to the Alice Portugal (PC do B) campaign, supported by Costa, for the Salvador City Hall.

Another company linked to the conglomerate led by Suarez, Al-Teix Patrimonial appears as a party to a lawsuit in the Court of Justice of Bahia, arising from the expropriation of land by the state, for the realization of a project of public interest.

The Costa administration entered into an out-of-court settlement in the amount of R$270 million (in current values), ratified by the Court following controversy in the case file regarding the amount to be indemnified.

Responsible for conducting the process, the State Attorney General’s Office was contacted by the report, but did not respond to questions sent.

José Garcez, CEO of Termogás, spoke with Sheet and denied any participation by the company’s partners and directors in Efrain’s appointment to the MME.

He said that, as with any other regulatory agency directors, the relationships maintained with Efrain are professional.

“Businessmen do not indicate anyone. The choices are made by the government,” he said. “Any entrepreneur in the energy, oil and gas sector has a relationship with directors of the regulatory agent. Professional relationships.”

The CEO of Termogás said that Lula’s administration gives “good signals” to the sector. “If the government intends to develop and take advantage of what it has already done there [de gasodutos]this is important,” he said.

Claiming to represent the company, Garcez did not comment on possible deals by companies linked to Suarez with the Bahian government and described Costa as “qualified to assume any important position”.

TO UNDERSTAND THE DEBATE ABOUT GAS IN BRAZIL

1. Brazil is a major producer of pre-salt gas, but the input is reinjected at the extraction site due to the lack of gas pipelines and an organized market
2. Due to its fossil origin, environmentalists are against its use
3. Among advocates of all energy sources, he is also not consensual. It would not be an option for generating electricity, since the country has hydroelectric plants and conditions to expand solar and wind sources
4. It is seen as an alternative in places with a high concentration of consumers, whether residential or industrial.
5. The distance between the place of extraction and consumption affects the choice of input. The longer the pipeline, the more expensive the transport and the final gas price; studies indicate that gas may be an option in SP and MG, but indicate that it is not financially viable in points such as PI and MT