⚛️ Nuclear energy greenlight

Good morning! This week, we talk about the prospects of Brazil’s new nuclear power plant. The push to make Brazil’s abortion laws one of the world’s strictest. And a state of cargo transportation infrastructure.

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New nuclear plant gets go-ahead from the courts

The top court in Rio de Janeiro state lifted an embargo on works of the Angra 3 nuclear power plant, the construction of which has dragged on since 1984 but remains far from completion.

State of play. In April 2023, authorities in the municipality of Angra dos Reis halted construction due to delays in payments for land concession and changes to the original project that affected the urban planning agreement between city hall and Eletronuclear, a state-controlled firm that runs Brazil’s nuclear power plants.

Overdue. Since the military dictatorship launched the Angra 3 project, it has suffered from many delays, caused by factors ranging from the Chernobyl disaster, a massive currency crisis in the late 1980s, corruption investigations involved in Operation Car Wash, to recent recessions.

• The Mines and Energy Ministry recently estimated that completion would cost roughly BRL 20 billion (USD 3.72 billion), on top of the BRL 8 billion that have already been poured into the project.

 Why it matters. With Angra 3, nuclear power would make up 3 percent of Brazil’s electricity matrix (from the current 2.1 percent).

Investments. The government’s new industrial policy promises to expand nuclear energy as part of a USD 60 billion plan to combine economic development and environmental responsibility in its national development agenda. 

• Additionally, Brazil and France signed an agreement on March 28 that foresees collaboration to foster nuclear power generation and tap into Brazil’s uranium reserves. 

• The National Development Bank (BNDES) is expected to present in July a study on ways to finance the construction of Angra 3.

Is it worth it? A 2020 report by the Escolhas Institute and consultancy firm PSR claimed Angra 3 would become the most expensive energy source in Brazil. It estimated that scrapping construction and replacing the site with solar power would lead to savings of BRL 12.5 billion for consumers.

• “From an energy standpoint, building Angra 3 is just not worth it. If reactivating this plant involves maintaining Brazil’s nuclear program and military reasons, then the government must make that explicit,” said Sergio Leitão, founder of the Escolhas Institute.

• Maintaining the construction site alone costs the government roughly BRL 1.2 billion a year.

Protests may force evangelical caucus’s hand on abortion bill

Brazilians in at least eight states protested this weekend against a bill making Brazil’s abortion bans much stricter than they already are. The proposal’s backers felt the blow, and the leader of the evangelical caucus in the House admitted that the matter could be put on the back burner — at least until after the October municipal elections.

• Just days before, the House had swiftly voted to fast-track the proposal, and conservatives gloated about having the numbers to get it passed.

 Why it matters. If approved, the bill would equate abortions after the 22nd week to murder (even for victims of rape). Women who interrupt their pregnancies would face prison sentences of between six and 20 years; the maximum sentence for rape in Brazil reaches ten years.

State of play. Abortion in Brazil is only permitted in specific situations: rape, when babies have no viability, or when the mother’s life is at risk. The bill in the House would make Brazil’s abortion laws some of the world’s most restrictive, on par with countries such as El Salvador, Afghanistan, and Indonesia.

• In practice, the abortion bill could be even stricter than it seems at face value. It talks in terms of the “viability” of a fetus, indicating that women could be convicted if they terminate pregnancies earlier than the 22nd week if a court considers that the fetus was viable.

Political games. House Speaker Arthur Lira brought the abortion bill to the forefront as part of his strategy to rally support from conservatives to elect a successor next year, as Mr. Lira will not be allowed to run for another two years ahead of the House. That’s why he would risk the public backlash of sponsoring such a proposal.

• For conservatives, making the bill such a hot topic of discussion is a win, even if the proposal doesn’t make it all the way to approval. The right is trying to get members of the leftist Luiz Inácio Lula da Silva administration to oppose the strict ban in order to have sound bites to feed its base and accuse the government of being “pro-abortion.”

What they are saying. Lula tried to thread that needle during the weekend. He said he personally is against abortions but called the bill “insane.”

What Brazilians think. Most Brazilians are against legalizing abortions (figures hover around 70 percent according to recent polls). However, a 2023 survey showed 59 percent were against locking up women who interrupt their pregnancies, up from 50 percent four years prior. For rape cases, 87 percent of Brazilians defend women’s right to a legal abortion.

Markets

ANS, an agency that regulates the private health market, shows that the HMO sector reported a net profit of BRL 3.33 billion (USD 619.38 million) in Q1 — its best since 2019. Turnover was on par with pre-pandemic years, which ANS sees as evidence of the sector’s recovery from a recent downturn. Roughly 75 percent of HMOs had positive net results in Q1.

• But HMOs continue to say they are in crisis and have unilaterally terminated contracts they claimed were not financially sustainable. 

• Amid pressure from patients, a group of lawmakers threatened to open a hearings committee into the behavior of HMOs. The sector responded by agreeing to discuss with Congress a solution and reactivate some of the terminated contracts.

Chart of the week: Infrastructure woes

A study by the Dom Cabral Foundation found that Brazil’s public roadways are 3.2 times more dangerous than privately run ones due to an increased frequency of jams and severe accidents. Roadways account for the lion’s share of cargo transportation in Brazil, and the poor state of many of them means that agricultural producers lose as much as BRL 5 billion (USD 930 million) per harvest.

• The glass-half-full way to look at the numbers is that Brazilian infrastructure is trending in the right direction, as things were much worse in the past.

Stories we’re following

Amid the perception that the inflation dragon has not yet been slain (and questions about the government’s fiscal discipline), most banks bet that the Central Bank will not cut interest rates at this week’s policy meeting — keeping them at 10.5 percent.

President Lula will meet with his budgetary council today amid pressure from markets for the government to cut spending in order to meet its zero-deficit target.

Amil and Dasa, two major healthcare groups, merged their hospital operations — creating the country’s second-largest hospital network. The cost of health services in Brazil rose by 8.31 percent in the last 12 months.

Electoral courts in Rio de Janeiro state have moved almost 100 polling stations away from areas controlled by organized crime and asked for federal troops to help police the municipal elections in October.

The state of Rio Grande do Sul is again on alert for floods. Meanwhile in the Amazon, the Acre River is down to a ten-year low due to droughts affecting the rainforest. Floods and droughts have become more and more common in Brazil.

In case you missed it

The Senate turned down part of a presidential provisional decree that created mechanisms to compensate for tax revenue losses by changing the federal tax credits system — and catering to business lobbies.

The Supreme Court decided that returns on the FGTS mandatory severance funds will have to at least match inflation. While the ruling affects public accounts, the government avoided seeing the changes take effect retroactively, which would have been the worst-case scenario.

The results of the recent EU Parliament elections may very well have delivered a death blow to any possibility of the Mercosur-EU free-trade agreement being ratified. 

A controversial bill to legalize casinos in Brazil is again on the agenda in next Wednesday’s sitting of the Senate’s Constitution and Justice Committee.

Brazil did not sign the declaration of the Summit on Peace in Ukraine, which called for Kyiv’s territorial integrity to be respected. Brazil said peace could not be achieved without Russia being invited to discussions.

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