TITLE:
Infrastructure Development and Regulatory Rents: The Brazilian Experience
AUTHORS:
José Roberto Ferreira Savoia, Renata Wandroski Peris Wolf, Eduardo Augusto do Rosário Contani, André Castro Carvalho
KEYWORDS:
Regulatory Agencies, Regulatory Risk, Electricity Brazilian Sector
JOURNAL NAME:
Beijing Law Review,
Vol.15 No.3,
September
30,
2024
ABSTRACT: This study analyzes the development of regulatory agencies in Brazil after the privatization process. The focus is on the government’s intervention in the electricity sector by means of Provisional Measure 579/2012, which established rules to benefit consumers but also reduce concessionaires’ revenues. We used a sample of 22 companies to compare the returns and risks before and after the implementation of the Provisional Measure. The results indicate an increase in systematic risk in the electricity sector and increased equity costs in other infrastructure sectors, showing evidence of contagion on related industries, suggesting that regulatory measures affected the opportunity cost of investments and reduced foreign investments. Consequently, preventing new effects will raise different perceptions of commitment to the rule of law and regulatory stability.