Tom Zé thought about this while studying samba. It could have been studying the LRCap (Capacity Reserve Auction) 2026. It was the auction of the end of the world, it was rocking and now they want to make the world (as we know it!) end. We understand that, with what is publicly available so far, there is no legal basis that justifies the annulment of the LRCap.
Firstly, a public policy choice was made, like so many others that have already been made. If, in a solid constitutional system, administrative merit is not used to protect arbitrariness, the fact is that it cannot be claimed that there was no debate and lack of legitimacy. Since 2022 the topic has been discussed, including having already been the subject of a judicial questioning, which led to the redesign the way in which proposals are ranked among potential bidders. And all this while the objective need to expand the Brazilian generating complex was and remains unquestionable. You can’t assume that you spent all this time studying to know how to ignore it. There was debate.
What cannot happen is that we remain content with the fate that in Brazil even the past is uncertain and use it as an alibi to tear up the regulations during the match. To stop being the country of the future, we need to have a minimum of deference to the present. Legal certainty matters and going back on your own steps is not worth it. There’s no way to write yesterday’s newspaper again.
Discussing alternatives, weighing costs and benefits, is always legitimate and necessary, but there is a rite and occasion for this. In this case, the debate has been had and the occasion has passed – it is indefensible to rewrite the past on the grounds that it could have been different and supposedly better. There is a risk of falling into the old assumption that, in Brazil, even the past is uncertain: these events only weaken the legal security of the sector, making investment more costly and hindering the attraction of new businesses.
This belated and disorderly discomfort has generated more passionate sensationalism than serious debate to guide future choices. So disorderly that it is generally accompanied by contradictions. For example: “There wasn’t enough competition!” and “The problem is paper projects!”. It is always possible to discuss whether or not there was enough competition and whether the rules of capacity auctions prevent adventurers from participating.
These discussions will, however, be prospective for future events, as will many other reflections already made throughout the history of infrastructure auctions in Brazil. But It is not possible at the same time to say, on the one hand, that there was no competition — and, on the other, that there were too many participants because the rules accepted PowerPoint projects. It’s illogical. The new opportunity to have these discussions — hopefully, this time, in a responsible, technical and non-sensational way — is given with the publication of the guidelines for the new LRCAP for batteries.
The need to contract power still remains, and will continue for a long time, given the advancement of the energy transition, whether through the availability of thermoelectric, hydroelectric or storage systems. But there is no doubt that canceling a tender without legal basis brings more problems than solutions, diluting investor confidence and, at the same time, delaying the projects that the country needs to stay afloat.
Brazil has an important history of respecting contracts and this legacy must be respected. Canceling an Auction without a defect would be legally invalid and institutionally dangerous, leading to a state of uncertainty that borders on anomie — and which will also increase the risk premiums linked to other projects that the Country certainly needs. There is no self-protection for convenience. It presupposes a nullity. If not, you are compensated.
Brazil will not become a more predictable country, or less costly, or more attractive to investments, canceling legitimate decisions because their results did not please some. Legal security exists precisely to reinforce that the rules of the game exist and must be respectedespecially in moments when the temptation to rewrite the past seems more convenient.
* Juliana Melcop and Lívia Amorim are partners in the energy area of Veirano Advogados
Articles published by CNN Infra seek to stimulate debate, reflection and shed light on views on the main challenges, problems and solutions faced by Brazil and other countries around the world. The texts published in this space do not necessarily reflect the opinion of CNN Brasil.
