Brazil Government discusses plan to reduce natural gas cost

March 12, 2019

(Reuters) – President Jair Bolsonaro’s government has discussed a review plan to regulate the natural gas sector to increase competition and reduce costs for input consumers, such as industries, a senior source told Reuters.

The measures would partly retake a program outlined during the Michel Temer administration, the so-called “Gas to Grow”, which gave birth last year to a bill that was not deliberated by the National Congress.

“The plan is being discussed internally within the government,” said the source, who spoke on condition of anonymity because the matter is not yet public. “It would be a new ‘Gas to Grow’, it does not have an official name yet,” he added.

In an interview with O Estado de S. Paulo newspaper last week, Economy Minister Paulo Guedes said the government wants to promote a “cheap energy market shock,” which would reduce costs by almost 50 percent.

According to Guedes, the government wants “a clash of reindustrialization with cheap energy.”

The source confirmed that Guedes’ speech made reference to the plans under study for the gas sector, but did not detail the progress of the discussions nor the schedule foreseen for its progress.

Launched in June 2016, “Gas to Grow” was defined by the Ministry of Mines and Energy under the Temer administration as a set of measures to improve the regulatory framework of the gas sector in the face of expectations of a reduction in Petrobras’ of divestments that have been carried out by the state company.

At the time, the ministry stated that the program would result in “elimination of barriers to entry of new suppliers”, “greater competition and reduction of prices” of natural gas, also encouraging investments in exploration and production.

Among the measures envisaged were the liberalization of the gas industry, with expansion of the so-called free market, in which agents can contract consumption directly with distributors or marketers, and improvements in pipeline concession processes and storage facilities.

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