Brazil’s National Energy Policy Council (CNPE – Conselho Nacional de Política Energética), linked to the Ministry of Mines and Energy (MME), has postponed any decision on resuming construction of unit 3 at the Angra NPP.

Angra NPP has two operating pressurised water reactors (PWRs) – the 640 MWe Angra 1, supplied by US Westinghouse Electric Company, which was connected to the grid in 1985 and the 1,350 MWe Angra 2, supplied by Siemens, which began operation in 2001.

Construction of Angra 3, which features a Siemens/KWU pressurised water reactor, began in 1984 but was suspended after two years. The project resumed in 2006 and first concrete was poured in 2010. However, work stopped again in 2015 following allegations of corruption involving government contracts. The unit was then 65% complete. In 2022, Eletronuclear ordered construction to restart but in April 2023 the city government of Angra dos Reis ordered work to stop again citing various issues including the promised payment of compensation.

In February, nuclear utility Eletronuclear, a subsidiary of the national electricity group Eletrobras, adopted a series of strategic measures to improve management and strengthen the financial sustainability of the company. These initiatives were intended to ensure improvements in the current governance model and enable the continuity of the construction of Angra 3.

Following the CNPE meeting, Minister of Mines & Energy Alexandre Silveirahe told reporters that he had stressed the strategic importance of the nuclear sector for Brazil, but “we have to look at the issue of Angra 3 holistically”. While he supported the completion of Angra 3 he said “it is necessary to point out a caveat, that Eletronuclear is completely restructured as a company with sufficient musculature to give transparency and efficiency to the management of the work”. He added: “Today it is not a company that we are sure can execute a work of this size.”

In 2019, the National Bank for Economic & Social Development (BNDES – Banco Nacional de Desenvolvimento Econômico e Social) was hired by Eletronuclear to carry out a study the technical, economic and legal feasibility of the project. The results of the survey were delivered in September 2024. The study concluded that overall cost of abandoning Angra 3 may exceed BRL21bn ($3.5BN) while the cost to finalise the construction is estimated at around BRL23bn and the amount already invested in the work is almost BRL12bn. The plant was expected to enter commercial operation in 2031. The BNDES study also identified that some BRL800m in Angra 3 equipment had been used by Angra 2.

Industry experts argue that the resumption of the project is strategic, considering the need for a reliable energy source given the increasing participation of intermittent sources such as wind and solar in the electricity matrix.

However, Eletronuclear starts 2025 with a debt of around BRL7n and an annual operating cost of BR 800m. The situation also involves Eletrobras, privatised in 2022 which holds 35% of the voting shares in Eletronuclear.

Silveira, noted that failure to approve completion of Angra 3 would result in an immediate cost of BRL14bn, in addition to the termination of contracts with suppliers and costs related to demobilisation. There is also a risk of compromising the operation of the Angra 1&2 since Eletronuclear would not have enough resources to buy fuel.

State-owned ENBPar (Empresa Brasileira de Participações em Energia Nuclear e Binacional) would have to recognise an accounting expense of BRL3.3bn due to the devaluation of plant-related assets, adding to a total cost of BRL11bn. ENBPar, established in 2022, is a public company linked to the Ministry of Mines & Energy to retain state control over the operation of NPPs and other functions assigned to Eletrobras before its privatisation. In addition to controlling Eletronuclear, ENBPar also controls Nuclear Industries of Brazil (INB), which includes mining, beneficiation, and the enrichment of uranium and the manufacture of the fuel.

Following the discussions in CNPE, Eletrobras held discussions with the Federal Government resulting in a conciliation agreement under the Mediation & Conciliation Chamber of the Federal Public Administration related to the government’s role in the company following its privatisation.

The Attorney General’s Office of the Union (AGU – Advocacia-Geral da União) and Eletrobras agreed on governance aspects and the Union’s participation in the company after almost two years of discussion. The agreement enables the end of a lawsuit pending in the Federal Supreme Court (STF – Supremo Tribunal Federal). The agreement also impacts the financing and future of the Angra 3 and the life extension of Angra 1.

Among the measures envisaged are the expansion of Union (government) members in the Eletrobras Board of Directors. The Union will have three members and Eletrobras ten members, in addition to a member in the five-member Fiscal Council of the company.

According to Eletrobras, the guarantees of BRL6.1bn currently provided by the company in the financing granted by BNDES and Caixa to the Angra 3 project remain unchanged. The 2022 investment agreement Eletrobras and ENBPar related to Eletronuclear, in particular the financing of Angra 3, will be immediately suspended with the signing of the conciliation agreement. The investment agreement will be terminated if and when there is deliberation by the competent bodies determining the resumption of the construction of Angra 3.

Interested parties requested BNDES to structure a new and comprehensive model for the project to complete Angra 3, and a new and independent out-of-court mediation process should be established.

Eletronuclear will issue debentures with a total nominal value of BRL2.4bn to finance the Angra 1 life extension. These bonds will have a total term of ten years and a four-year grace period from each issue. The debentures will be mandatorily convertible into Eletronuclear shares, if the conditions are met, such as the reduction of operating expenses. Of the total, BRL500m will not be converted in the event that there is consensus regarding the model for Angra 3 completion.

Petronoticias commented: “Eletrobras got what it wanted: the company no longer has the obligation to provide resources for the construction of the Angra 3 plant, if the federal government decides to advance the project.”

With the end of the action in the STF and even without any obligation to invest in the construction of Angra 3, the feasibility studies of the plant will continue. The agreement provides for the opening of a new conciliation procedure dealing exclusively with this issue. In this new forum, together with the AGU Conciliation Chamber, Eletrobras will discuss with the government the realisation of a new study by BNDES maintaining the principle that the Angra 3 project must have its economic-financial balance guaranteed, with financing under market conditions, respecting the principle of tariff modicity, as already provided by law following the privatisation of Eletrobras.