The Brazilian government on Thursday issued a provisional decree relaxing regulatory performance requirements for energy systems in the North region.
The changes benefit Amazonas Energia, a floundering power distributor in the state of the same name, making its contracts viable and paving the way for the company to be sold. Amazonas Energia supplies electricity to roughly 1 million people across the entire state of Amazonas, an area the size of France, Spain, and Sweden combined.
The decree’s provisions come into force immediately, but need to be approved by Congress within 120 days to remain valid.
As The Brazilian Report revealed last month, the power supplier is buried in debt and could be forced to halt operations without the deep regulatory changes made this week (which include allowing for the change in its controller as a way to avoid the extinction of the public concession in its favor).
Amazonas Energia’s liabilities include BRL 10 billion (USD 1.87 billion) in debt to Eletrobrás, Latin America’s biggest power company.
For many market watchers, however, the decree reeks of market manipulation. Regulatory flexibility has already benefited Amazonas Energia since 2018, when the company was privatized, and an extension of the benefit was already predicted by the market. But now it comes mere three days after the J&F Group — a massive holding company with interest in many sectors and whose assets include JBS, the world’s biggest meat producer — purchased 13 power plants...
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