By Brazil Stock Guide – Brazil’s minister of mines and energy, Alexandre Silveira, criticized recent increases in margins charged by state gas distributors, arguing that regulatory misalignment between the federal government and the states is weakening the effects of the New Gas Law and limiting price reductions for consumers and industry.
In a statement released on Tuesday, the Ministry of Mines and Energy said tariff revisions approved or currently under discussion in several states have resulted in higher end-user prices, even in scenarios where gas demand is falling. According to the ministry, part of the efficiency gains expected from the opening of the natural gas market are being absorbed by local distribution margins, undermining the objectives of the 2021 reform and Brazil’s broader policy of tariff moderation.
Brazil’s gas sector has been undergoing a gradual liberalization process since the enactment of the New Gas Law, which aimed to boost competition, diversify supply and reduce structural costs across the value chain. That agenda was reinforced in 2023 with the launch of the Gas to Employ program by the National Energy Policy Council, linking cheaper gas to industrial expansion, job creation and reindustrialization, with positive spillovers for income and state tax revenues.
Silveira said the reform requires regulatory coherence at all levels of government. “It is unacceptable that efficiency gains achieved through market opening are appropriated through excessive increases in local gas distribution margins, penalizing consumers, industry and state competitiveness,” he said. “The consumer cannot pay the price for regulatory inefficiencies. Natural gas must be a vector for economic development, job creation and investment attraction, not an obstacle to growth.”
According to the ministry, tariff reviews in states such as Alagoas, Amazonas, Bahia, Espírito Santo and Pernambuco point to expressive margin increases by concessionaires, in some cases following public consultations with short deadlines and limited social participation. The ministry warned that outdated tariff structures, investments misaligned with projected demand and restrictions on consumer migration to the free market persist in some concessions, despite existing regulatory rules at the state level.
At the federal level, the government says it is working with sector agencies to develop methodologies aimed at more efficient tariffs, long-term infrastructure planning and stronger competition. Still, a lack of regulatory alignment across states has limited the transmission of these gains to final prices, delaying the full impact of market opening for industry and households.
In response, the ministry has stepped up coordination efforts, sending formal letters to federal and state authorities, antitrust bodies, regulatory agencies and governors, urging action to reinforce economic regulation and competition oversight. The government also plans to advance discussions on a National Pact for the Development of the Natural Gas Industry in 2026, aiming to harmonize rules and ensure that gas prices effectively support regional and national economic growth.
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