On Friday (12/05), Light, Rio de Janeiro energy distribution company, filed for bankruptcy. One of the main reasons was the interference of the criminal organizations in the company’s business, which led to a mismatch between expenses and revenue, and a consequent increased loss of cash flow up to the point that the company could no longer sustain debts that now total R$ 8.7 billion.
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Light and the Organized Crime
Light is one of the largest of its kind in the country, it provides energy to 4.5 million users in Rio de Janeiro, the sixth consumer market in this segment. However, 20% of its coverage area is in areas dominated by drug trafficking and armed militia control. In some places, such as the West Zone, where the militia has most of the territory, it even connects their illegal real estate projects to Light’s system and charges the final consumer as if they produced the energy. In areas where the cables comes from the distributor, the militia charges an additional fee, which ends up encouraging the customer to give up the official service.
Vicious Circle
The greater the losses with energy theft, the greater the costs that need to be apportioned among consumers that pay their energy costs properly. The result is a proportional increase in the electricity bill of these who pay on time to cover losses the company has.
Other Issues
The company faces many other issues, such as defaulting clients, theft of energy not connected to organized crime, and more. However, the losses imposed on the company by organized crime are the most evident aspect of the energy distributor’s extensive indebtedness, which led the holding company to file for judicial recovery.
Average Yearly Loss
Due to the high cost of energy theft and default, the company consumes more resources than it manages to earn. It’s about R$ 800 million per year. The company recorded in the financial statement for the third quarter that it had a debt of R$ 8.7 billion.
Solution
All solutions that are debated will have to face the same problems that led to the current situation. Thus, market experts believe it will be necessary to create a particular concession model for crime-ridden areas in Rio de Janeiro. The specialists’ assessment is that the standard regulation model does not work, and the losses are high and considered unsustainable for the private investor, which increases the chance that LIght will revive crises.
Among the suggestions evaluated are the removal of gang-controlled areas from the concession or compensating the companies in some way for losses, without transferring them to the electricity bill. This would make the cost prohibitive for the consumer, which worsens another problem, defaulting.
A National Problem
The problem of energy theft is not restricted to Rio, it has grown all over the country since the middle of the last decade. Some energy distributors, such as Amapá distribution company, and Amazonas Energia, in Amazonas, are even facing financial problems.
At the top of the list of energy providers most affected by energy theft, the most serious case is in Amazonas. In 2021, non-technical losses, popularly known as “cats” (gatos), represented 122% of the energy distributed by Amazonas Energia to the regular consumer.
Losses from energy theft affect both consumers and companies. In the case of theft, today, 70% of the financial losses are passed on to the regular customer’s tariff, the other 30% are assumed by the distributor.
The regulatory agency Aneel, calculated that, in 2022, the loss with thefts reached R$ 5 billion, which represents about 3%, on average, of the value of the tariff paid by the consumer.
Source: G1; O Globo; Folha de SP; G1 [1], [2].
