Utility Regulation Oversight in Brazil: the role of TCU

Utility Regulation Oversight in Brazil: the role of TCU

Utility Regulation Oversight in Brazil: the role of TCU

Brazilian Court of Audit (TCU) -> Brazilian SAI www.tcu.gov.br

INTOSAI Working Group on the Audit of Privatisation

11th meeting, Sófia, June 2004.

Utility Regulation Oversight in BrazilPresentation Contents

Utility Regulation Oversight in BrazilPresentation Contents

Privatisation oversight Regulatory agencies oversight Results of TCU actions Projects in progress Economic regulation and social inequality - the access to

electricity audit

Privatisation in BrazilPrivatisation in Brazil

From 1991 to date: 69 federal state owned enterprises were privatised; new concessions were granted in the sectors of energy,

telecommunications, road and railways.

Privatisation´s resultPrivatisation´s result

59.559

11.326

Stock sold

Debttransferred

US$ millions

Total70.885Total

70.885

PrivatisationOversight by TCU (Norm TCU nº 27/1998)

PrivatisationOversight by TCU (Norm TCU nº 27/1998)

Previous and concomitant control: TCU takes part at least twice in any process:

before the auction, to analyse privatisation rules and the minimum sale´s price;

after the privatisation, to verify the signed contracts and government revenues.

Anytime, if irregularities are found, TCU can command a caution measure in order to set the process right.

Privatisation oversight by TCUMain resultsPrivatisation oversight by TCUMain results

Minimum sale´s price review for several companies (EDN, IRB, BANESPA, BEG)

increment over US$ 700 millions

Prospects pre-qualification review More competitiveness

Changes in the sale´s rules Greater transparency

Telecommunication

1997

Electricity

1996

Transport

2001

Oil and gas

1997

Utility Regulation in BrazilThe regulatory agenciesUtility Regulation in BrazilThe regulatory agencies

ANEEL

ANATEL

ANP

ANTAQ & ANTT

Utility Regulation Oversight by TCUStructure and actingUtility Regulation Oversight by TCUStructure and acting

Specialized unit: SEFID (since 1998) staff: 22 auditors

Control practices: Concomitant control of new concessions (since 1995) Performance audit in the agencies (since 1999) Audit, evaluation and review of regulatory processes

(since 2000) Concomitant control of the periodic tariff review in

electricity distribution sector (since 2002)

Regulators´control in Brazil Main resultsRegulators´control in Brazil Main results

Improvement on the minimum price calculation method telephone, cable tv and hydroelectric power station

concessions;

Roads toll reduction: inclusion of undue taxes, overestimation of investments

and not consideration of additional revenue; Better treatment of environment issues in the oil and gas

sector; Identification of unclear definition of the duties of

ministries and regulatory agencies.

Utility Regulation Oversight in Brazil Projects in progressUtility Regulation Oversight in Brazil Projects in progress

We have two improvement projects going on: Modernisation of public services regulation control.

Supported by IDB (2002 - 2006) CERDS - Oversight Improvement with focus in the Social

Inequality Reduction. Supported by DFID/UK (2002-2006)

Utility Regulation Oversight in Brazil Projects in progressUtility Regulation Oversight in Brazil Projects in progress

Modernisation of public services regulation control.

Mapping and development of control´s practices CECR - Centre for the Study of Utility Regulation

Oversight Corporative education Institutional communication plan

Oversight improvement with focus in the social inequality reductionOversight improvement with focus in the social inequality reduction

Main audits Universalisation in the access to electricity Universalisation in the access to Telecommunications

(ongoing)

Interstate passengers road transport (ongoing)

Audit about universalisation in the access to electricity

Audit about universalisation in the access to electricity

2003

Universalisation in the access to electricity Audit issuesUniversalisation in the access to electricity Audit issues

Audit issue 1Who is not connected to the electricity distribution network in Brazil?

Audit issue 2Are the criteria used to choose the beneficiaries suitable?

Audit issue 1Who is not connected to the electricity distribution network in Brazil?Audit issue 1Who is not connected to the electricity distribution network in Brazil?

Brazil is a south American country


Brazil is a federation of 27

states.

The states are divided in

municipal districts


There are 5.561 municipal districts

in Brazil


The electrical exclusion have been

analysed for each municipal district.

0 to 10 % of population is not connected



Audit issue 2Are the criteria used to choose the beneficiaries suitable?Audit issue 2Are the criteria used to choose the beneficiaries suitable?

Policy objective: subsidise low income households.

Policy implementation premise: households with low electricity consumption imply low

income households.

TCU investigated if: Household electricity consumption is correlated with

household per capita income.


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Income per capita (living wage)


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Households that deserve subsidy (income criterion)


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Households that receive subsidy (consumption criterion)


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Households that receive subsidy (consumption criterion)

Households that receive reduced subsidy (social program database criterion)


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Households that deserve but don´t receive subsidy (low efficacy)

Households that receive and deserve subsidy(correct)

Households that receive but don´t deserve subsidy (inefficiency)

Universalisation in the access to electricityConclusionUniversalisation in the access to electricityConclusion

The criteria defined in the Brazilian law are not suitable, because:

high income consumers that have a low consumption receive subsidy (inefficiency);

an expressive amount of low income consumers don´t receive subsidy (low effectiveness);

low income consumers subsidise high income consumers (regressivity).

Universalisation in the access to electricity Main recommendationsUniversalisation in the access to electricity Main recommendations

use supplementary criteria to fit the households that must receive subsidy;

implement subsidy in a national extent due to regional inequalities, there is a risk of overcharging

households in the poorest States.

improvement on the delivery of public services.

Projects in progress Expected impacts Projects in progress Expected impacts

Improvement on the utility regulation oversight, including regulatory agencies and other areas of government,

systemic view of the regulatory activity, interaction with consumer councils, increase of transparency, improvement on the regulatory activity.


email: [email protected]



Thanks!!Marcelo Sobreiro Maciel






INTOSAI Working Group on the Audit of Privatisation

11th meeting, Sófia, June 2004.

Documents

Utility Regulation Oversight in Brazil: the role of TCU