The Brasduto – Gas Pipeline Expansion Fund, was one of the most controversial items in Congress. If maintained, the areas of health and education could lose BRL 242 billion over the next 20 years.

President Jair Bolsonaro vetoed last Tuesday (08/09) the excerpt of a bill  Law No. 209 of 2015  which directed pre-salt resources to states, municipalities and to finance the expansion of gas pipelines – Brasduto. Petrobras announced last night (08/09), progress in the sale of pre-salt oil blocks

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Considered one of the most urgent for the electricity sector, the law was experiencing an impasse in the short-term energy market, with approximately R$ 8,7 billion in unsettled amounts.

Today, 100% of that money goes to the Pre-Salt Social Fund. The text foresaw that transfers would be divided: 50% would remain in the Social Fund; 30% would go to State Participation (FPE) and Municipality Participation (FPM) funds; and 20% for the construction of gas pipelines.

The measure had been approved by Congress in early August. The financing of gas pipelines would be done through a line called “Brasduto”, which was also vetoed.

The Minister of Mines and Energy, Bento Albuquerque, had already stated that the government had recommended the vetoes. If Brasduto were maintained, the areas of health and education could lose BRL 242 billion over the next 20 years.

According to a press release from the Planalto Palace, the creation of the Brasduto would represent an “initiative vice”, because it is up to the president, and not to Congress, to regulate administrative structures.

“Furthermore, the proposal did not present an estimate of the budgetary and financial impact, generating an increase in expenses”, says the official note.

Bolsonaro maintained the main point of the text, which resolves a legal dispute between power plants and the government over who should pay the bill for reducing electricity generation through hydroelectric plants and for activating thermoelectric plants, which are more expensive.

The law establishes compensation for hydroelectric power plant owners participating in the Energy Reallocation Mechanism (MRE) who are affected by the effects of power plants with bidding and implementation priority indicated by the National Council for Energy Policy (CNPE).

The effects are the flow of energy due to delay in entering into operation or entry into operation in unsatisfactory condition by the transmission, in addition to the difference between the physical guarantee granted in the motorization phase and the values ​​of the effective aggregation of each motorized generating unit to the SIN.

About Brasduto

Brasduto Program, provides financing for the construction of gas pipelines, natural gas processing units and LNG terminals. It would be a way to encourage the expansion of essential infrastructure for the import, regasification and transport of natural gas and serve regions of the country that are isolated from the existing network.