(Argus, 13.Sep.2021) — Brazil’s push for state-controlled Petrobras to divest from the domestic natural gas distribution business may end up boosting individual states’ ownership in the sector, thwarting plans to open up competition.
Gaspetro, Petrobras’ subsidiary for natural gas distribution, is tied to Brazil state governments in 19 regional gas distribution companies. Petrobras agreed in July to sell its 51pc stake to Compass Gas. Japan’s Mitsui owns the other 49pc.
As part of the Gaspetro sales, the states and Mitsui can exercise call options to purchase Gaspetro stakes. Mitsui informally told its partners in the distribution companies it will not do so, a person with knowledge of the negotiations told Argus, opening the door for the states to buy stakes in their regional gas distributors.
In discussions late last month, the presidents of northeastern Brazil gas distribution companies discussed the possibility of increasing the states’ shares in each company. In the eight states where Mitsui is also a direct controller of the company, with a 24.5pc share in addition to its Gaspetro stake, the states might have enough investment capacity to increase their shares and are considering the move.
“Many governors see the importance of the natural gas market in the energy transition and to help the economic recovery of local economies in post-pandemic times,” said Larissa Dantas, director-president of the distribution company for the state of Rio Grande do Norte, Potigás.
In some states, the gas distribution companies still need a few more years of public investment, especially to expand infrastructure, Dantas said.
Because Mitsui is partnered with the distributors through its Gaspetro stake, it plans to defer a decision on whether to buy more of the business, a move that would shrink Compass’ stake.
The Gaspetro sale is part of Petrobras’ commitment to competition watchdog CADE to open the gas market. The agency has nearly 11 months to review the Compass proposal.
Compass is the gas division of Cosan group. It owns Sao Paulo gas distributor Comgás, which has the largest marketed volumes of natural gas in the country. Players in the gas sector worry the transaction would hinder competition, giving market power to the largest gas consumers.
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By Flávia Pierry
