(Reuters) – Brazil’s government issued tougher rules on Thursday for the renewal of energy distribution contracts, making it easier to cancel concessions early and allowing the country to limit payouts from firms that fail to comply with the rules.
The Energy Ministry has been working on guidelines since 2022 that affect international energy groups such as Italy’s Enel (BIT:) and Portugal’s EDP as they are among 20 concession contracts set to expire by 2031 – the target dates.
The new rules are in line with government hopes that tighter controls on distributors will force companies to provide better services after climate-related events in Brazil left millions of people without electricity in some major cities over the past few months.
“In case of non-compliance with the contract, we allow early termination of the concession or intervention,” Energy Minister Alexandre Silveira told reporters at an event to launch the guidelines in Brasilia.
The launch of the guidelines has been delayed by about five months from its previous date.