Brazil’s Power Reform Heads to Veto Test Over Royalty 'Jabuti' and Coal Extension

Overview

• President Luiz Inácio Lula da Silva has until Monday, November 24, to sanction or veto controversial insertions into MP 1.304.
• Electricity distributors and consumer groups urge vetoes of the coal plant contract extension to 2040 and compulsory thermal procurements, warning of higher costs and tariff pressure.
• The oil and gas institute IBP asks Lula to reject article 15, saying the royalty change would replace ANP’s PRP, risk taxing freight and insurance, and undermine investment in mature fields.
• Senator Eduardo Braga defends the royalty rewrite, credits Finance Ministry official Marcos Pinto for the idea, challenges Petrobras’s objections, and allies cite a potential R$4 billion revenue gain from 2026.
• Supporters highlight the MP’s core goals of curtailment compensation, caps on sector charges such as the CDE, and broader access to the free market to bolster renewables and modernize the system.