Our Partner Diogo Nebias was interviewed by the Painel S.A. column of Folha de S.Paulo in its coverage of the administrative proceeding for forfeiture (caducidade) of Enel's concession initiated by Aneel in the city of São Paulo and its metropolitan region.
In the published analysis, Diogo highlighted two factors that tend to define the pace and outcome of the proceeding: "The forfeiture process is complex. Several calculations must be made to compensate the concessionaire for the investments made that will not be amortized. There is a high risk of litigation, and designing a new tender also takes time."
The rules on forfeiture in public service concession agreements (Article 38 of Law No. 8,987/1995) pose two highly material technical challenges: (i) determining the compensation owed to the concessionaire for the unamortized portions of reversible investments, under an agreement whose final term is 2028; and (ii) structuring a new tender capable of ensuring continuity and quality of service, in an environment marked by foreseeable litigation.
For the market, the practical point is that the opening of the proceeding already prevents early renewal of the concession, but does not anticipate an immediate replacement of the operator.
