Rio will need gas market strategy

Since its concession in the year 1997, Naturgy is the company responsible for the operation of the public services of natural gas in the city of Rio de Janeiro. This includes the exploration and distribution of piped gas and all its by-products.

However, in order to maintain its development in the coming years, the state will have to make a strategic decision soon: Renew or not the concession agreement with Naturgy. The reason for this is the requirement of the tax recovery Regime (RRF), signed in 2017, with the federal government.

Alerj recently opened a parliamentary inquiry Committee (CPI) to ascertain why Rio, the country’s largest national natural gas producer, has one of the highest tariffs on the market.

The initial finding of several market specialists is that Naturgy is failing to comply with contractual obligations with regard to the investment requirements. According to Katia Repsold, president of the Organization, the reduction of 43.82% of investment in the last three years is real. However, Katia transfers responsibility to the energy and Sanitation Regulatory Agency, which, in turn, denies the accusation, stating that the company did not even present a schedule of investments within the established contractual term.

Still, the gas market crisis in Rio does not derive exclusively from Naturgy’s inefficiency. The excessive charging of pipeline transportation by Petrobras, for example, is an important factor for the current scenario. Moreover, the regulation of the price of natural gas is another reason contributing to this instability, removing the competitiveness of the product.

Therefore, it is necessary to correct these types of distortions, in addition to improving the quality control of services and the search for the reduction of the price of gas to the final consumer, because only then will it be possible for the state to overcome the current crisis.

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