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Brazilian federal court exempts companies from extra tariff [free access]

April 13, 2017

A large group of Brazilian companies will be partly spared an additional power tariff that will be levied later this year, after a federal court issued an injunction in their favor on April 10, 2017.


Several industry groups obtained the injunction that partially exempt the companies they represent from the extra tariff the government plans to add to power bills from the second half of this year. The groups are Abrace, an association of large power consumers in Brazil, including aluminum maker Alcoa Corporation and petrochemical company Braskem; Abividro, an organisation representing glass producers; and Abrafe, which acts in favor of steel and mining companies such as Vale SA.


The government adopted the extra charge of up to 7 per cent to compensate power transmission companies such as Centrais Eletricas Brasileiras SA (Eletrobras), Companhia de Transmissão de Energia Elétrica Paulista (CTEEP), Companhia Energetica de Minas Gerais (Cemig) and Companhia Paranaense de Energia (Copel) for the early renewal of operating licenses in 2013. The early renewal left power transmission companies with a credit, as investments they had made in their operations were not fully amortised since licenses were terminated before the expected time.


The court decision, if not overturned, would impact expected revenues of these power companies. State-controlled firm Eletrobras, for example, had already added to its accounting books BRL36.5 billion from its share of the broad compensation. Other power companies have also done the same.