Privatization Auction of Compagas in Paraná Will Be Postponed to 2023 After Delay in Renewal of the Gas Company’s Concession Contract

With a Delay in the Renewal Process of the Concession Contract to the Private Initiative of the Gas Company Compagas, the Privatization Auction of the Company Will Delay and Should Not Happen Until the Beginning of 2023.

The projections for this Friday, (06/24), regarding the privatization auction of the natural gas company in the state of Paraná, Compagas, are that the process will only occur from the year 2023. And the reason why the concession process of the company may take even longer is the delay in the renewal of the concession contract to the private initiative of the distributor, necessary for the privatization to proceed as planned by the state government.

Delay in the Renewal of the Concession Contract of Compagas Will Not Allow the Privatization Auction of the Natural Gas Company to Happen During the Year 2022

The fuel sector in the state of Paraná is highly unstable this week, as industry sources indicate that the concession contract of Compagas has not yet been renewed and will remain delayed, thus causing an impasse in the process of the privatization auction of the company. This means that the transfer to the private initiative of the gas company is unlikely to happen in the year 2022 and will need to be postponed to the first months of 2023, although the state government has not planned for these periods. 

The current idea of the state government of Paraná is to anticipate the extension of the contract, which expires in July 2024, by another 30 years, in order to accelerate the complete privatization process of the company in the coming years.

However, the renewal of the concession contract has been delayed and the Civil House of the government of Paraná stated that it needed to request new information from the Economic Research Institute Foundation (Fipe), “due to constant fluctuations in the gas market and significant changes in the global economic scenario.”

Fipe is the organization responsible for the analysis and approval of the renewal of Compagas’ concession contract to the private initiative, and although it had defined that this would happen by the second half of this year, there are still no forecasts for the completion of the auction process. Thus, the government of the state of Paraná will need to wait another semester to continue the privatization process of the gas company and may have to wait a few months in early 2023 for this to take place. 

New Factors Prevent the Privatization from Happening in 2022 and Continue Delaying the Concession Process of the Gas Company to 2023

The initial schedule of the government of Paraná, in partnership with Fipe, had plans to finalize the privatization notice and hold the auction still during the year 2022, but the delay in the renewal of the concession contract has changed the administration’s plans. Additionally, another factor is contributing to the delay of the auction, the need for Legislative approval for the process to move forward.

Thus, the electoral race for the year 2022 is affecting the Legislative’s perspective on the concession process of Compagas to the private initiative and is yet another problem for the auction to take place.

This is because the current governor, Ratinho Júnior (PSD), is favored for reelection and is in favor of the privatization process of the company but still has to face the opposition forces in his quest for reelection in the state.

Now, the state government is only waiting for the renewal of the concession contract, as according to the president of Copel, Daniel Slaviero, as soon as the concession of Compagas is renewed, the company is working with a timeline of about 180 days to organize the auction on B3 and accelerate the privatization.