Business · Companies · 11 hrs ago
NTS threatens legal action over Brazil gas pipeline tariff review
NTS, which operates major gas pipelines in southeastern Brazil, is challenging a tariff review by the country’s oil and gas regulator, ANP.
The regulator’s method counts how much of the cost of building the pipelines has already been recovered through past service when setting the value used to calculate charges.
NTS says the method changes the rules for past investments and says it has suspended approval of new projects.
It may sue if ANP rejects its administrative appeals or if it cannot reach an agreement with the government.
Gas distributors and industrial users say NTS is using investment plans to pressure the regulator, while arguing that consumers have already paid for the pipelines through decades of tariffs.
Lower charges could reduce the price of gas, but delays to a compressor station in Japeri could threaten supply to southern Brazil, according to the distributors’ association.
NTS says the review currently affects contracts equal to 11% of its revenue, while major contracts with Petrobras expire in 2030 and 2031 and could be affected later.
NTS, a gas pipeline operator in southeastern Brazil, says it may take the national oil and gas regulator to court over a tariff review.
The company has suspended approval of new investments while it challenges the regulator’s method for valuing its pipelines.
Gas distributors and industry groups say the review could lower costs for consumers and accuse NTS of using investment decisions to pressure the regulator.
The dispute also affects a planned compression station in Japeri, Rio de Janeiro state, which NTS has delayed.
- Who
- NTS and Brazil’s National Agency of Petroleum, Natural Gas and Biofuels (ANP) are at the centre of the dispute. Gas distributors and industry groups oppose NTS’s response.
- What
- NTS may sue to overturn the tariff review and has suspended approval of new investments. The review changes how the value used to set pipeline tariffs is calculated.
- When
- The ANP made its decision during the tariff review this year. NTS says it will sue if administrative appeals are rejected or no agreement is reached with the government.
- Where
- The dispute concerns NTS’s gas pipeline network in Rio de Janeiro, São Paulo and Minas Gerais, Brazil.
- Why
- The ANP’s method accounts for how much of the pipelines’ construction investment has already been recovered through past services. NTS says the method changes the rules for existing investments.
NTS
Gas distributors and industry groups
Tariff calculation
NTS
NTS says the ANP’s method has no precedent in Brazil or abroad and changes the rules for investments already made.
Gas distributors and industry groups
Distributors say consumers have already paid for the pipelines through decades of tariffs and that lower tariffs would reduce gas costs.
Investment decisions
NTS
NTS has suspended approval of new projects while the dispute continues.
Gas distributors and industry groups
Abegás says conditioning investment on the company’s remuneration amounts to pressuring the regulator and letting the company set its own return.
Japeri station
NTS
NTS postponed the compression-station project during the dispute over its remuneration.
Gas distributors and industry groups
Abegás says further delays could threaten gas supply in southern Brazil.
NTS was sold to a consortium led by Canadian fund Brookfield for US$5.2 billion.
The ANP chose a method for calculating the pipeline asset base in its tariff review.
NTS suspended approval of new investment projects and postponed work on the Japeri compression station.
NTS says it will take legal action against the ANP.
- Pipeline network
- About 2,000 kilometres
- Sale price
- US$5.2 billion (R$28 billion at the current exchange rate stated in the article)
- Affected contracts
- Equivalent to 11% of NTS revenue so far
- Major Petrobras contracts
- Due to expire between 2030 and 2031
- Japeri project
- Compression station in Rio de Janeiro state
What people are saying
expropriatory bias
coerce the regulator