RIO DE JANEIRO, June 26 (Reuters) – Brazil’s power regulator Aneel is facing a severe budget crisis, its head, Sandoval Feitosa, said on Thursday, urging the government to release funds to prevent the key agency’s operations from grinding to a halt.
WHY IT’S IMPORTANT
A potential shutdown of Aneel would come amid government efforts to rein in spending to meet fiscal targets, and could jeopardize regulatory oversight of the power sector in Latin America’s largest country.
Aneel’s main roles include regulating Brazil’s power generation, transmission and distribution, as well as overseeing concessions, implementing government policies and establishing tariffs.
BY THE NUMBERS
Aneel’s budget has been slashed to 117 million reais ($21.28 million) from a previous 155 million reais as the government imposed spending containment measures, according to Feitosa. The agency had initially requested 240 million reais to meet its operational needs.
KEY QUOTE
The agency will only be able to function until 2 p.m. every day starting in July because of the cuts, Feitosa told reporters in Rio de Janeiro.
He noted Aneel had already laid off staff, suspended research, call center operations and preventive inspections due to financial constraints. “This is the worst budget cut that Aneel has ever experienced in its history,” Feitosa said.
WHAT’S NEXT
Feitosa assured that Aneel’s analysis of distribution concession renewals, as well as power auctions, would not be affected despite the ongoing budget crisis. The agency awaits a decision from the government on its funding request.
($1 = 5.4976 reais) (Reporting by Rodrigo Viga Gaier; Writing by Gabriel Araujo; Editing by Aurora Ellis)
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