How will it make your life worse? By David Deccache

David Deccache is an economic advisor at the Chamber of Deputies/PSOL and a volunteer Professor of Economics at UnB. Director of the IFFD. Master (UFF) and Doctoral candidate in economics at UnB.

electrobras

Eletrobrás was officially installed on June 11, 1962, during the João Goulart government. It was privatized yesterday, June 9, 2022, by the Bolsonaro government. A day of mourning and sadness for the country.

The creation of Eletrobras was proposed in 1954 by the then President Getúlio Vargas. The diagnosis was clear: it would be impossible for the country to have energy sovereignty and establish a project of independence and economic development depending on the private sector for energy generation..

Today Eletrobras is present throughout Brazil, in addition to being the largest company in the electric energy sector in Latin America. It produces about 38% of the energy generated in Brazil.

With privatization, tariffs will increase especially in the poorest regions of the country, in the North and Northeast.

This is because the Eletrobras subsidiaries play an important role in incorporating into their balance sheets the costs of investments in regions with low distribution network density, which prevents electricity from becoming more expensive in the poorest regions of the country.

The privatization of Eletrobras, in terms of prices, will have an effect very similar to the unbridled pricing policy of Petrobras that today plagues consumers and is hypocritically defended by the Bolsonaro government.

Eletrobras is the most efficient company in the national electricity sector and charges the cheapest energy. While the privately owned hydroelectric plants of transnational companies charge an average of BRL 250.00 per 1,000 kWh, Eletrobras plants charge BRL 65.00 per 1,000 kWh”.

Privatization will not only cause a significant increase in the electricity bill, but it can also result in blackouts, such as what happened in 2020 in Amapá, which was the result of the precariousness of the structure of the state’s electric company after its sale to the private sector.

Even the Federation of Industries of the State of São Paulo (FIESP) has already expressed its opposition to privatization, fearing the impact of the sale of the company to the industrial sector, which is the largest consumer of energy in the country.

In fact, the private company in Amapá did not have a spare transformer and was bailed out by Eletrobras, the state-owned company that Bolsonaro sold.

The people will also lose decades of research and technological production that could put Brazil at the forefront of the energy transition.

In addition to the main hydroelectric plants in Brazil, Eletrobras has several research centers and laboratories, such as Eletrobras CEPEL, the FURNAS Civil Engineering Technological Center and the Itaipu Technological Park – Brazil.

These centers are of essential importance in the production of knowledge, research and innovation in the electricity sector. Losing control over Eletrobras means losing the ability to direct the future of the energy transition.

In addition to the economic, social and environmental damages of privatization, the method was rhyming. At the TCU, Minister Vital do Rego pointed out an underestimation of R$ 63.33 billion in the value estimated by the government and proposed the rejection of the calculations of the amount to be paid by the company.

For the Minister of the TCU, the amount would be R$ 130.39 billion, instead of the R$ 67 billion approved in December by the National Energy Policy Council. very serious.

The flaws pointed out by Vital were: a) the price of electric energy in the long term, which does not include the variable power; b) the hydrological risk; c) the cash flow discount rate; d) the model presented does not price the installed power of the plants…

In addition, there is a draconian clause on poison pills that aims to abort any possibility of renationalization.

In 2017, when Temer was already trying to privatize Eletrobras, the National Electric Energy Agency delivered a study to the Ministry of Mines and Energy that predicted an impact of at least 17% in the increase in the average residential electricity bill in the country, if the company were privatized. !

Eletrobras recorded a net profit of R$ 6.4 billion in 2020, even in a pandemic year, having been the sixth most profitable company in the country in the period.

The company also has a cash generation of R$ 15 billion per year. However, Bolsonaro privatized for just R$33.7 billion… Good deal for billionaires and the financial market. Bad for the people.

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