Newsletter Infrastructure | Brazil´s New Gas Law: relevant changes to increase competition in the sector

19 . April . 2021 |

Federal Law No. 14,134/2021 (“Brazil’s New Gas Law” or “BNNGL”), taken into effect on April 9, 2021, brought relevant regulatory changes towards improving competition and legal certainty in the gas industry. Brazil’s New Gas Act is aimed at (i) expanding and promoting investments; (ii) increasing competition by reducing entry barriers; and (iii) reducing anticompetitive practices.

In Brazil, industrial plants are the largest consumers of natural gas, which is used as input by the chemical and petrochemical sector (52% of the production) and by gas-fired thermal power plants (33% of the production). While the development of a competitive market is certain to generate substantial economic benefits, it does require the existence of legal certainty, which can be reached through clear and predictable regulation*.

In this regard, BNNGL revoked Federal Law No. 11,909/2009 (“Former Gas Law”), setting forth important changes applicable to the entire natural gas supply chain (upstream, midstream, and downstream). The most relevant changes brought by BNNGL are detailed below:

Finally, it should be noted that BNNGL brought relevant regulatory changes that may improve competition in the natural gas industry, ensuring legal certainty to investors. However, the ANP will play a fundamental role in regulating the legal aspects mentioned above, and an open debate with all interested parties will be critical to define the best regulatory standards for the development of the new model.

*Source: O Estado de S. Paulo – “Novo Marco do Gás: Entenda como funciona a lei que pode reduzir o preço do insumo no País”

For further information, please contact the Infrastructure Team.

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