Eletrobras employees try to stop controversial privatization at Brazil’s Federal Audit Court

RIO DE JANEIRO, BRAZIL – On Tuesday, June 15, electricians went on strike against the sale of the company. According to the union, the protest had 80% adhesion on Wednesday.

In a complaint submitted to the TCU, the AEEL labor union argues that the Provisional Measure privatizing Eletrobras violates 10 Federal Constitution articles and creates a risks of denationalization of the company’s capital and of raising energy prices for the end consumer.

Among the main questions raised are the fact that the bill was voted on without the compnay being the subject of a valuation study and the fact that the matter is being dealt with urgently.

According to the association, the claim is prompted by the “excessive vices of origin, the potential damage to the treasury, the revenue waiver with future dividends,” in addition to the “consequences for energy security.”

The Provisional Measure is the target of criticism in the electric sector and in the industry due to the inclusion in the Chamber of Deputies of amendments that provide for the mandatory contracting of thermal power plants and small hydroelectric plants, in addition to contract renewal related to the program that subsidized renewable energy.

For critics, in addition to creating a market reserve that would raise energy costs, the so-called “jabutis” (legislative amendments to the basic text of the bill) also encroach on the duties of the agencies responsible for energy planning in the country.

Entities linked to the electric sector and to industry assess that the amendments will cost Brazilian consumers R$41 (US$8.1) billion. This amount would be enough to raise electricity bills by 10%.

The government and the measure’s advocates argue that, on the contrary, it would reduce the cost of energy and the risks of rationing in the future, since the thermal plants would help to preserve water in hydroelectric plants’ reservoirs.

“Unless it’s privatized, there will be chaos in the energy system in Brazil,” President Jair Bolsonaro said Wednesday. In a conversation with supporters outside the Alvorada Palace, he also said that “virtually everything that is public” is taken by corruption.

The privatization bill foresees the issuance of new Eletrobras shares with sale exclusive to private investors, diluting the government’s stake, with the justification that the company is currently unable to invest and maintain its market share.

The adding of amendments has led former privatization advocates to oppose the Provisional Measure’s, including economist Elena Landau and the ex-director of the energy and water regulatory agencies, Jerson Kelman.

The opposition of Eletrobras employees has no focus on these measures. “While they discuss amendments, the original Provisional Measure is a prehistoric dinosaur, out of step with global practices, full of vices of origin and a civilizational and competitive retrocession,” says AEEL.

The strike of Eletrobras employees has the support of other categories, such as oil workers and opposition parties. On social networks, opponents of the privatization are holding the campaign “Save the Energy,” a “national movement against the privatization of Eletrobras.”

ANEEL’s director Emanuel Torres says that the state company’s administrative employees are set against the privatization, and shifts have been extended to 24 hours in operational areas. The strike, he said, is not intended to impact the energy supply in Brazil.

For the full picture, see our Brazil Tax Reform: Complete Guide.