Brazil court orders transfer of Amazon power distributor to Âmbar Energia

A Brazil federal court ordered electric power watchdog Aneel to approve within 24 hours the transfer of control of Amazonas Energia to Âmbar Energia, a company belonging to J&F.

J&F is one of Brazil’s largest conglomerates and is owned by the Batista brothers – Joesley and Wesley. 

The operation is an alternative to terminating the concession of the distributor in Amazonas state – currently owned by Oliveira Energia – due to the company's economic and financial unsustainability.

The Thursday ruling states that the business plan submitted by Âmbar to Aneel should be accepted without the conditions imposed by the regulator. 

Ilmar Muniz, a lawyer specializing in consumer, criminal and constitutional law at Grupo CM Advocacia, said the court’s ruling overrides Aneel's administrative decision.

“If Aneel and Âmbar understand that administrative measures are necessary, it’s important that an appeal takes place so that the higher courts can decide whether the decision should be complied with in its entirety or not,” he told BNamericas. 

Announced on Tuesday, the plan modified by Aneel granted Âmbar flexibility in its obligations of around 8bn reais (US$1.5bn) and established a capital contribution of 10bn reais. But Âmbar was asking for 15.8bn reais of debt to be relaxed to complete the purchase.  

Subsequently, Âmbar said it would not be interested in taking over Amazonas Energia under the conditions approved by the agency, claiming the decision would make it impossible to save a company that has lost 40bn reais in the last 25 years. 

“As an alternative to intervention or the expiry of the concession, which would cause serious risks to the energy supply and high costs to the public coffers, Âmbar will ask for the decision to be reconsidered,” the company said in a press release on Wednesday. 

Speaking to reporters, mines and energy minister Alexandre Silveira called for a swift outcome to the case, pointing out that energy distribution in Amazonas is “on the verge of collapse.”

He said provisional measure (MP) 1,232 will expire next week and that the alternative to transferring control to Âmbar would be intervention in the distributor. 

The MP, which has a 60-day deadline, granted temporary flexibility to Amazonas Energia in relation to its efficiency and financial obligations. 

Muniz said any final decision in the case will have an impact on the public purse, since it will influence a transaction of great magnitude. 

“For this reason, it needs to be extremely accurate so as not to generate economic and social impacts,” said the lawyer.