Brazil Advances Enel São Paulo Forfeiture in Test for Foreign Utilities
Government lawyers have cleared the way for Enel to lose its São Paulo power concession over repeated storm failures, establishing a strict new benchmark for foreign utilities facing license renewals across Brazil.
Brazilian government lawyers dismissed Enel’s appeal last Friday, advancing a regulatory push to strip the Italian company of its São Paulo electricity concession. Rivals including Equatorial, Neoenergia and CPFL have already begun examining the asset's books. The process targets the power grid serving the largest metropolitan economy in the southern hemisphere.
The regulator unanimously voted on April 7 to open the forfeiture process—known as caducidade—after severe storms across 2023, 2024 and 2025 exposed systemic fragilities. A December 2025 event left millions of homes without power for days. Enel submitted a recovery plan, but technical staff deemed the measures insufficient.
The company contested the regulator's finding that only 67 percent of affected customers had power restored within 24 hours of the December storm, arguing the true figure was 80.2 percent. Federal prosecutor Marcelo Escalante Gonçalves rejected this dispute on July 10, ruling the agency applied its calculation method consistently across the sector.
Crucially for the broader market, the prosecutor concluded that even accepting Enel’s preferred 80.2 percent figure, the forfeiture would still stand. The case rested on multiple independent failures, including emergency response times, interruptions exceeding 24 hours, contingency planning and crew productivity. The opinion establishes that inadequate service need not breach a specific regulatory index to warrant termination.
Enel is signalling a long court fight rather than a sale, potentially taking the matter to the federal audit court. This marks a departure from 2022, when the company sold its Goiás concession to Equatorial under similar pressure. The company's resolve is partly anchored to the five and a half billion reais, or roughly one billion dollars, it paid to win the asset from Neoenergia in 2018.
The regulator’s director-general has stated the only negotiated outcome he foresees is a transfer of control subject to agency approval. The mines and energy ministry, which holds final authority on forfeiture, is simultaneously holding up contract renewals in São Paulo, Ceará and Rio. The regulator has also noted that its timetable is untouched by local elections, despite the São Paulo governor's demands to tear up the contract.
The resolution of this dispute will effectively set the price of poor service for every foreign utility holding a Brazilian licence. Multiple distribution concessions expire between 2026 and 2031, with the government explicitly tying renewals to quality and financial performance. However, transferring the licence does not solve the underlying problem: a dense, 4,500-square-kilometre network facing increasingly violent weather.
