By Brazil Stock Guide – Brazil’s federal audit court has warned the national electricity regulator that it could block the early renewal of Enel SpA’s São Paulo power distribution concession, citing repeated blackouts and potential legal violations tied to the utility’s performance.
The alert was issued by Augusto Nardes, a minister at the Tribunal de Contas da União, who gave the National Electric Energy Agency five days to provide information on Enel’s request to extend its São Paulo concession ahead of schedule. The move follows a series of outages that left about 2.3 million properties without electricity across the metropolitan region.
The warning stems from a petition filed by prosecutors at the audit court seeking to suspend any administrative acts related to the renewal. While Nardes stopped short of immediately granting the request, he acknowledged the legal plausibility of the claims and the seriousness of the situation in Brazil’s largest city.
“Inadmissible events have occurred frequently in the largest city in Brazil and South America,” Nardes wrote in his decision. He added that the recurring crises have caused “billions” in losses to the community and called for urgent action by all responsible authorities to prevent further disruptions.
According to the ruling, the audit court may issue an injunction halting the early extension if there are signs of violations of legal norms or risks of harm to public administration. The decision also raises the possibility of holding public officials accountable should irregularities be confirmed.
Prosecutors also argued that Enel’s São Paulo concession should be broken into smaller areas, echoing a recommendation previously made by Governor Tarcísio de Freitas. The proposal aims to increase oversight and improve service quality in the state.
Enel, controlled by Italy’s Enel SpA (ENEL IM), formally requested the early renewal of its São Paulo concession in March 2025, even though the current contract runs through 2028. The request has faced legal challenges, including a lawsuit filed by São Paulo’s city government. A court ruling issued in October ordered the immediate suspension of the renewal process at the regulator until a final decision is reached on whether the contract could be terminated.
In a statement, Enel said it did not comment directly on the audit court minister’s decision but emphasized the need for a broad assessment of the challenges facing power supply in São Paulo. The company said it has made investments and complied with regulatory requirements.
“Enel confirms full compliance with regulatory indicators, having delivered consistent improvements across all service quality indices, as verified by recent inspections carried out by the regulatory agency,” the company said.
Enel Brasil also said it remains confident in the country’s legal and regulatory framework. “Enel Brasil reaffirms its confidence in the Brazilian legal and regulatory system to ensure security and stability for investors with long-term commitments in the country,” the statement said.
The electricity regulator did not respond to requests for comment.