Comgás Renews Grant for 20 More Years with São Paulo Government and Plans to Invest 21 Billion to Create New Jobs in the Region

Comgás Announced On Friday (01) That It Signed The Extension Of Its Concession With The Government Of SP For Another 20 Years And Will Now Operate Natural Gas In The State Until 2049.

In a note this Friday (1st), Comgás reported that it renewed its concession for piped gas services with the government of São Paulo for another 20 years in much of the state. The decision was against the opinion of the Ministry of Economy and the natural gas sector. The government’s estimate is that thousands of new job opportunities will be created in the next 20 years, boosting the economy and income of the state.

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New Investments From Comgás Promise To Generate Jobs For The SP Population

In a market announcement made this Friday, Comgás defended the extension and announced investments in expanding the network that benefits consumers by resolving disputes over the contract and changing the tariff adjustment index. Overall, the contract provides for investments of R$ 21 billion.

“It Is A Major Achievement For The State Of São Paulo,” Says Comgás CEO Antônio Simões In A Statement Sent To The Press. “Comgás Has Shown That It Has A Balanced Concession, With Robust Investments Under A Modern Regulatory System, Generating Benefits For The Entire Society, Unlocking Jobs And Income.”

Disputes In The Natural Gas Market In Brazil Increase As The Free Market Approaches

São Paulo, with its decree, attempted to regulate a gas pipeline project by defining it as a distribution pipeline, allowing it to be funded by captive gas consumers. This change could have created a regional gas market in São Paulo, with its own rules, isolated from competitors in the newly opened market. Brazil’s largest oil and gas advocacy group also praised ANP’s decision. “This Strengthens The Market Opening Process And Competition,” It Said.

The So-Called New Gas Law Aims To Increase Competition And Efficiency And Reduce Costs, While Prohibiting The State-Owned Petrobras From Purchasing Gas Directly At The Wellhead Starting In January And Reducing Its Dominance In The Pipeline And Refinery Segments.

The Planned Sale By Petrobras Of Its Gas Distribution Subsidiary Gaspetro To Compass Gas Is Another Critical Point For The Gas Industry. The Sale, Under Review By The Competition Regulator CADE, Concerns Some In The Sector Who See The Move As A Step Towards Vertical Integration In The Largest Gas Market In The Country, São Paulo.

Industry Critics Argue That The Deal Would Also Transform Compass Into A Powerhouse In The Sector By Expanding Into The Piped Gas Distribution Business In The 19 States Where Gaspetro Partners With Local Governments. The Process May Be Delayed And Could Potentially Be Tied Up In Legal Battles.

Gas Island In SP

The Natural Gas Sector Also Criticizes The Proposal To Create A “Gas Island” In SP, With The Construction Of The Subida Da Serra Pipeline By Comgás Itself, And The Interconnection Of The Three State Distributors, Separating The State From The Rest Of The National Gas Network.

In An Opinion Delivered To Arsesp (São Paulo Public Services Regulatory Agency), The SEAE (Competition Advocacy Secretariat) Of The Ministry Of Economy Evaluates That The Extension Reduces Competition In The Gas Sector And Impacts The Tariffs Paid By Consumers In Other States.