Measure Created By Jair Bolsonaro Could Benefit Companies With Up to 17% Reduction in Energy Bills; Impact on Public Coffers Is R$ 50 Billion

A Measure Announced by Jair Bolsonaro During Last Monday, June 6, Stated That the Government Created a PEC Aiming to Reduce Both Electricity Bills and the Prices of Diesel, Gasoline, and Cooking Gas. 

In a press conference on last Monday, President Jair Bolsonaro announced a measure that proposes cutting taxes charged by states and some items of our daily life, such as electricity, which can be reduced by 17%. Companies may benefit.

Currently, Aneel has decreed that the charge color will be green, which means it is a good time for energy production in Brazil. The scenario has been looking positive after a year of scarcity flags, which had a higher cost than the red flag level two. 

See the Comments from President Bolsonaro Regarding the New Project 

How Does the Project Aim to Work and How Will It Impact Companies’ Finances? 

As mentioned earlier, the reduction in electricity bills can reach 17% – but it varies since each state has a different tax percentage. Therefore, companies may save significantly until the end of 2022 on their electricity bill. The project is expected to last until December, when Bolsonaro must vacate his position for another president to take over on January 1. Elections are scheduled to start in October. 

According to analysts, this may be the strategy created by Jair Bolsonaro and Paulo Guedes, the Minister of Economy, to control prices amid a double-digit inflation scenario. Moreover, surveys shared by Datafolha show little chance for the current government to get elected if it continues at the same pace: Luiz Inácio Lula da Silva, the party’s rival, could win even in the first round. 

Decision Will Impact Well Beyond Electricity Bills 

The decision shared last Monday, June 6, by the federal government will impact other sectors beyond electricity bills. Diesel is expected to drop R$ 0.8 directly at refineries and could create a more favorable environment for truck drivers. Meanwhile, gasoline, which costs over R$ 7 in at least twenty Brazilian states, will also see a significant decrease of R$ 0.7. 

Bolsonaro “went hard” on taxes charged by states because he knows that interfering with Petrobras could lead to a significant drop in the company’s shares. In other words, it would go against the investors of one of Brazil’s largest companies. The company has been allowed to adjust its prices according to the market since 2016, which has allowed it to start making profits. 

Both truck drivers and businesses, as well as regular consumers who use gasoline and cooking gas daily, will benefit from this new proposal. However, it is estimated that it has cost at least R$ 50 billion and that the amount passed on to the states is R$ 22 million.