Journal Article / Gas
The Development of the Natural Gas Transportation Network in Brazil: Recent Changes to the Gas Law and its Role in Coordinating New Investments
In Brazil, the consensus that natural gas regulation has failed to attract investments, especially from private companies, culminated in a new law for the natural gas sector, passed in March 2009 (Law No. 11,909). The most significant change this new law introduced was the new governmental role in co-ordinating investments in the transportation sector. The Brazilian government has had to plan pipeline networks, estimate the size of demand for transportation and organise bidding to select investors for new pipeline projects. Although the law has established a clear regulatory framework for the midstream sector, providing stability and the legal certainty necessary for long-term investments in assets with high specificity, it has not been able to fill all of the gaps that remain under Law 9,478. In this sense, besides the challenges related to effective implementation of the regulatory attributes defined in Law 11,909, the absence of certain issues prevents the modified legal structure from encouraging the entry of new players in the transportation sector. This paper has identified, according to the neo-institutional view, the mechanisms of co-ordination introduced by the new law and the limitations of the new regulatory framework.