BRAZIL Law and Practice Contributed by: Débora Yanasse, Bruno Salzano and Luisa Tortolano Barreto, Tauil & Chequer Advogados in association with Mayer Brown
Tauil & Chequer Advogados in association with Mayer Brown
Aqwa Corporate Building Av. Oscar Niemeyer 2000 15th floor
Rio de Janeiro RJ 20.220-297 Brazil
Tel: +55 21 2127 4210 Fax: +55 21 2127 4210 Email: BR-DEPT-Marketing@mayerbrown.com Web: www.tauilchequer.com.br
1. Structure and Ownership of the Power Industry 1.1 Law Governing the Structure and Ownership of the Power Industry Early Years The power industry in Brazil started at the turn of the 20th century with small, local private investments serving specific companies or municipal lighting. Canadian Light and the American & Foreign Power Company (Amforp) later entered the market by acquir- ing these assets and developing new ones. The indus- try was therefore originally developed and owned by private companies. A major change occurred around 1930, during Presi- dent Getúlio Vargas’s government. The Great Depres- sion reduced international investment and rising nationalism led the federal government to pass new laws increasing oversight and tariff regulation, which reduced returns. Public companies such as Chesf, Cemig, CEEE and Eletrobras were created to com- pensate for the lack of private investment, marking a new phase of direct government intervention. This phase of public investment began to reverse with the transition from military dictatorship to a liberal democracy. The 1988 Federal Constitution allowed power services to be performed directly by the fed- eral government or indirectly through concessions, permissions or authorisations.
The Development of a Market-Driven Industry in the 1990s In the 1990s, as part of a broader privatisation pro- gramme, the government took steps to increase pri- vate investment in the power sector and privatise three federal and 20 state-owned power generation and distribution companies. In 1995, Law No 8,987 (the “Concessions Law”) set general rules for concessions and permissions for public services, and Law No 9,074 introduced inde- pendent power producers and free customers with open access to all distribution and transmission facili- ties. In 1996, Law No 9,427 created the National Electricity Regulatory Agency ( Agência Nacional de Energia Elé- trica or ANEEL), an independent federal agency regu- lating and supervising the power industry in accord- ance with the Ministry of Mines and Energy ( Ministério de Minas e Energia or MME) policies. In 1998, Law No 9,648 completed the legal framework for a market-driven industry, establishing free power contracting between concessions, permissions and authorisation holders, and initial rules for unbundling power companies into generation, transmission, dis- tribution and trading entities. This law also created the Power Wholesale Market ( Mercado Atacadista de Energia Elétrica or MAE), later replaced by the CCEE, as defined below, and the National Electric System
50 CHAMBERS.COM
Powered by FlippingBook