BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano, Luisa Tortolano Barreto and Julia Braga, Tauil & Chequer Advogados in association with Mayer Brown
commencing their commercial operation. Pro- jects that sell energy in the regulated market, by contrast, usually have the commercial operation date required to meet the supply term for the specific auction in which they negotiated power, unless the entrepreneur requests a shorter term (eg, in order to sell power in the free market by an earlier date). Performance Bond In relation to greenfield power generation pro- jects that have sold energy in the regulated market, a performance bond must be submit- ted by the concessionaire or authorised agent to ANEEL, usually for an amount equivalent to 5% of the project’s capital expenditure (CAPEX) – as indicated by bidders in energy auctions in the regulated market – to guarantee the timely implementation of the project pursuant to its approved construction schedule. Assured Energy Concession agreements and authorisation acts may also indicate the officially approved pow- er output of the project, the so-called assured energy ( garantia física ), which is the maximum amount of power that the concessionaire or authorised agent is entitled to sell to the market. The project’s assured energy can be revised in cases specified in the regulations. Penalties Non-compliance with the terms and conditions of concession agreements and authorisation acts is subject to penalties imposed by ANEEL after an administrative proceeding, based on ANEEL Normative Resolution No 846/2019. Depending on the seriousness of the violation, ANEEL may impose penalties of a warning; fine; suspension of works or activities; specific performance; tem- porary prohibition from participating in public auctions for new concessions, permissions, or
authorisations and entering into contracts with ANEEL; revocation of authorisation; intervention and forfeiture of the concession or permission. 3.4 Eminent Domain, Condemnation and Expropriation Rights to Construct and Operate Generation Facilities If the proponent fails to reach an amicable agreement with landowners over compensation for the construction and operation of power gen- eration facilities on their land, the proponent may request the issuance of a Declaration of Public Utility ( Declaração de Utilidade Pública or DUP) by ANEEL, pursuant to ANEEL Normative Reso- lution No 919/2021, which entitles the proponent to easement or expropriation rights over these lands. Based on the DUP, the proponent may judicially obtain injunctions against landowners to access their land, and the court will define the fair compensation due to landowners, usu- ally based on market value. However, according to ANEEL’s precedents, the DUP only covers lands required for construction of hydropower plants or high-voltage transmis- sion lines and substations necessary to connect power plants of any source to the electricity grid. 3.5 Decommissioning a Generation Facility Apart from certain environmental obligations applicable to decommissioning of nuclear pow- er plants, there are no specific requirements for decommissioning of generation facilities in Bra- zil. Power generation facilities under the conces- sion regime will revert to the federal govern- ment, upon compensation if the investment by the concessionaire has not been fully amortised. Power generation facilities under the authorisa-
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