On Thursday, Brazil’s Energy and Mines Minister, Alexandre Silveira, announced plans for a power sector reform to expand the number of low-income households exempt from paying electricity bills to 60 million. Speaking at an event in Rio de Janeiro, Silveira noted that approximately 50 million households currently benefit from discounts under an existing government program, though the exact number receiving full exemptions was not specified.

Minister of Mines and Energy of Brazil Alexandre Silveira speaks during an interview with Reuters during CERAWeek by S&P Global in Houston, Texas, U.S. March 21, 2024.

Under Brazil’s current system, low-income households can apply for partial or full subsidies on their energy bills. The costs of these subsidies are distributed across the bills of other power consumers. The proposed reform aims to broaden access to this support, ensuring more families benefit from reduced or no-cost electricity.

Silveira emphasized that the reform seeks to address inefficiencies in the energy sector. He highlighted plans to adjust subsidies, particularly those benefiting large companies that produce their own electricity, which contribute to higher costs for regular consumers. The minister stated: “The reform will aim to reduce other subsidies, particularly those granted to large companies that generate their own power.” Details of the plan remain limited, but it is expected to be submitted to Congress in the first half of the year.

In Brasilia, Finance Minister Fernando Haddad clarified that no formal proposal to expand energy bill subsidies for low-income households had yet reached his ministry or the office of President Luiz Inacio Lula da Silva’s chief of staff. This followed Silveira’s announcement, indicating ongoing coordination within the government to finalize the reform’s scope.

Brazil’s power regulator projects that total subsidies for the energy sector will reach approximately 41 billion reais ($7 billion) in 2025, with 6.7 billion reais allocated to the low-income household program. The reform aims to balance affordability for vulnerable families with sustainable management of energy costs nationwide.

By expanding exemptions and refining subsidy structures, the government seeks to ease the financial burden on low-income households while maintaining stability in the power sector. The initiative reflects Brazil’s commitment to supporting its citizens’ access to essential services, ensuring electricity remains affordable for millions while addressing broader economic challenges in the energy market.