Brazil's power sector will drop its PL 414 modernization bill, started under the previous administrations, because it is stuck in congress and is hampering development in both the power and gas sectors.
The electric sector associations forum (Fase) will send a revised proposition to the current administration, which wants to reach a new pact with the sector.
PL 414 would still address many of the sector's issues if approved, but the bill will not move forward due to a lack of political will from the current administration, according to a sector source.
Some market participants are moderately optimistic about Fase taking the lead to establish a consensus across the sector, saying a search for unity is a positive. But many still question if any proposal sent to the government by Fase will be truly representative of the groups' 29 power association members, which have struggled to reach full consensus on any important matters.
Fase is drafting the proposal that will be sent to mines and energy ministry MME based on principles from a 2019 public consultation and its own previously published set of goals and proposals. The 2019 public consultation served as a basis for PL 414. The group aims to present a proposal that will guide MME minister Alexandre Silveira in defining guidelines for a new bill.
Fase will put the proposed text to a vote of its associates, attempting to send a final product to the ministry by the beginning of August, according to Fase president Mario Menel. Until then, political discussions surrounding the sector's future should not move forward, a congressman close to the negotiations said.
The lack of political leadership with technical expertise in the ministry remains a challenge for the sector, according to sources. Market participants and specialists expressed their concerns about this issue during the Enase conference in Rio de Janeiro last month. Many conference panelists agreed that the challenges are not actually technical but stem from conflicting economic interests within the sector. They also said there is a lack of leadership coordinating public policies to overcome such hurdles. The new deal would be the first step toward overcoming that obstacle.
