Abrace presents an ambitious plan to reduce energy costs by 109 billion reais, targeting both household electricity bills and industrial competitiveness.
Abrace, which represents major industrial energy consumers and free-market buyers, has launched a compelling proposal for presidential candidates: an agenda focused on eliminating approximately 109.1 billion reais in annual costs that currently weigh heavily on electricity bills. The initiative seeks to mitigate expenses deemed as “undue and inefficient” that hinder the competitiveness of the national productive sector.
Open Dialogue with Candidates
The entity has already established a dialogue with the teams of nearly all major presidential candidates, including figures such as Lula (PT), Flávio Bolsonaro (PL), Ronaldo Caiado (PSD), and Renan Santos (Missão). The goal is to convey the urgency and relevance of the proposed reforms for the country’s energy and economic future.
Pillars of the Proposal
The Abrace agenda, titled “Energy, Sovereignty, and Competitiveness: A Choice for Brazil,” rests on four fundamental pillars: revising charges and subsidies that inflate tariffs, and the continuous improvement of the sector’s regulatory framework. Other crucial points include the pursuit of greater efficiency in energy procurement and the creation of effective barriers against the imposition of new costs on consumers.
The Role of the Social Fund and Natural Gas
One of the most innovative proposals involves allocating resources from the Social Fund—derived from oil exploration—to cover sectoral charges and public policies that currently burden electricity bills. Simultaneously, the association is paying special attention to natural gas, a strategic input.
The president of Abrace, Paulo Pedrosa, laments that despite Brazil having one of the cleanest energy matrices in the world and vast natural gas reserves, consumers and companies continue to face increasingly high energy costs.
Pedrosa emphasized the direct impact of energy costs on the pricing of essential goods:
Energy must be competitive. It has to fit within the product’s price. If I produce aluminum, energy can only reach a certain price point. If it goes beyond that, there is no point in producing it here. If I produce fertilizer, the gas has to cost up to a certain point. Because if it costs any more, it is cheaper to ship in a boatload of fertilizer than to produce it here. Therefore, energy must be competitive.
Congress in Debate: Tariff Responsibility Law
Currently, the National Congress is debating the so-called “Tariff Responsibility Law.” The bill aims to replicate the principles of the Fiscal Responsibility Law to curb the uncontrolled growth of charges and subsidies embedded in energy tariffs.
CDE: A Critical Link in the Cost Chain
Sector analysis reveals an exponential growth of subsidies, sectoral charges, and public policies that put pressure on energy tariffs. Data from the National Electric Energy Agency (Aneel) indicate a 300% increase in charges over the last 15 years. The Energy Development Account (CDE), the primary vehicle for these subsidies, is identified as the main culprit.
Regarding natural gas, the Abrace proposal aims to unlock a market that has seen a significant portion of production being reinjected into reservoirs instead of supplying industry. The creation of a structured additional supply of natural gas at a competitive final cost is seen as essential to revive industrial demand, which has been stagnant for 15 years. Measures include reinjection targets for new fields, government-led gas auctions aimed at industry, reduced distribution tariffs, and the implementation of a “gas release” program. The approval and implementation of these measures could be a watershed moment for the Brazilian economy, promoting industrial competitiveness, attracting investment, and easing the burden on final consumers.
