End of the agreement with the Spanish Naturgy may mark the opening of the natural gas market in Rio de Janeiro for new concession contracts

At the end of the current contract with Naturgy for the two concession areas, the state can rebid the natural gas contracts. Rio de Janeiro is getting ready to explore the high market potential existing in the segment over the next few years.

The new State Secretary for Energy and Economy of the Sea of ​​Rio de Janeiro, Hugo Leal, commented this Tuesday, (24/01), on the future of the energy market in the state. He hopes to explore the segment's high potential over the next few years, with new bidding in progress. Among them are the new natural gas concession contracts, which must be carried out at the end of the current agreement with Naturgy.

Rio de Janeiro studies new natural gas concession contracts after agreement with Naturgy

In comments made earlier this week, the new State Secretary for Energy and Economy of the Sea of ​​Rio de Janeiro, Hugo Leal, highlighted the interest in expanding the natural gas market in the state. 

He intends to carry out a new tender for gas concession contracts at the end of the current agreement with Naturgy.

The company controls the distributors CEG and CEG Rio, whose concession contracts expire in five years.

Leal also stated that he is considering creating new concession areas in Rio de Janeiro for new contracts, in addition to the two already existing in the state.

The secretary points out that the reality of the market today is very different from that of 1997. This year, the natural gas service was granted to two concession areas with defined contracts: one for the Metropolitan Region (CEG) and a second for the interior (CEG Rio).

He believes that advances in the regulatory framework for natural gas can bring strong benefits for new future tenders to be carried out.

Although Naturgy has a satisfactory contract, Rio de Janeiro needs to take advantage of its high potential in the market to expand investments.

“I'm sure this operation will be very attractive, this possibility of our work here for the new tender. We have a new market environment. We will respect the concession, but we have to continue expanding this network”, said Hugo Leal.

RJ intends to internalize the natural gas market with new contracts signed in addition to the current ones with the company Naturgy

The focus now is on approving Naturgy's 4th and 5th tariff revisions — which were delayed and left for 2023.

This is because the state of Rio de Janeiro wants to carry out a true internalization of natural gas in the area, with new investments by Naturgy in the segment over the next 5 years.

“There are still five years to go [for the end of the current concession contracts] and we are going to dialogue and ask for investments to be made during these five years”, highlighted the secretary.

He also said that if Naturgy is not interested in new investments in the state market, other companies may turn their eyes to the state.

Despite this, natural gas concessions in Rio de Janeiro currently have impasses. This is because the 4th Tariff Review of CEG and CEG Rio, valid for the five-year period 2018 - 2022, was supposed to have taken place in 2018.

However, the polls were suspended and the differences between the agents regarding the revision of the tariffs are still present in the state.

In parallel, Agenersa, the state regulatory agency, is reviewing the regulation of the New Gas Law at the state level.

Thus, the new state secretary of Rio de Janeiro is preparing to expand natural gas contracts in the regional market after the end of the agreement with Naturgy.