Crisis in Brazil’s regulatory agencies threatens local energy sector

Brazilian federal civil servants, including professionals at oil and gas and electric power watchdogs ANP and Aneel, as well as environmental regulator Ibama, are pressing the government for more financial and human resources. 

The crisis in the federal agencies threatens the regulation of the energy sector and the progress of permitting processes for projects. 

On Thursday, the ANP board of directors suspended the day's meeting in support of the "Valoriza Regulação" (“value regulation”) movement, which involves action by staff at the 11 federal regulatory agencies against budget cuts and what they see as the lack of appreciation of civil servants.

At the end of May, the 11 federal agencies issued a joint statement in which they addressed the budget cut of approximately 20%, as well as the shortage of civil servants: currently, more than 65% of the positions in the agencies' staff are vacant. 

On Tuesday, BNamericas published a report stating that less than a third of the 82 actions set out in the regulator’s 2022-23 regulatory agenda had been completed. 

The following day, the regulatory agency's press office pointed to the lack of human and financial resources as one of the causes for the delays.

The ANP clarified that, in many cases, internal and external meetings are also held, as well as events with broad participation from those involved in the issue. 

"Thus, some of the items may need to be extended beyond the schedule initially planned in order to allow all those involved to be heard, to include suggestions received from the market and society etc.," it said.

It is expected that the agency's new regulatory agenda will be launched early in the second half of the year. 

On June 14, Ascema, which represents federal environmental workers, is due to decide on a proposal to call a general strike starting on June 24.

The strike has been considered after yet another round of unsuccessful negotiations with the federal government. The agency has been mobilized since January, having interrupted inspection activities and maintaining only bureaucratic office activities. 

The strike by agencies such as Ibama is jeopardizing licensing processes for oil exploration and production (E&P) projects – such as the permitting related to drilling in the Equatorial Margin – and for the generation and transmission of electricity, among others. 

In May, Petrobras' E&P director, Joelson Mendes, said that the reduction in Ibama's activities could reduce the company's average annual production by 60,000 barrels per day. 

One of the projects affected is the Mero area in the pre-salt Santos basin. The field will receive its third platform, the FPSO Marechal Duque de Caxias, this year.