# Governance and Dynamic Efficiency with Network Structure in the Brazilian Natural Gas Utilities
###### Abstract
The ANP is responsible for setting distribution tariffs and monitoring the quality of services provided by concessionaire companies. The regulation aims to ensure that the natural monopoly is used for the benefit of society, preventing abusive practices by distribution companies. In the national market, the majority of distribution companies operate with characteristics of natural monopolies, as the tariffs charged to customers of these companies are regulated according to their costs. Regulation in the gas sector is limited to activities under federal or state jurisdiction [7]. As a result, according to [PERSON] and [PERSON] [8] these companies tend to operate inefficiently. Like other energy sources, the distribution of natural gas is part of what are known as network utility services [9]. The nature of public utility services and the condition of natural monopoly at the local level give rise to delicate regulatory issues, as each federative unit has its own company and regulation. In this case, the state can act as both owner and regulator without clearly separating the two functions: public utilities are tasked with managing the business and ensuring that they meet public service obligations with acceptable quality, cost, and economic efficiency. Given the uncertain outcomes of these reforms, there is concern about whether these changes in the Brazilian natural gas market reflect improved sector efficiency in terms of resource utilization. According to [PERSON] and [PERSON] [10], the most advanced states in regulating the natural gas market in Brazil are Sao Paulo and Rio de Janeiro, with private companies operating in the market. We can see that productivity and efficiency analysis are two very useful tools to help companies and regulatory bodies understand performance and the ideal structure for the Brazilian market. [PERSON] et al. [11] point out that efficiency is a fundamental assumption for the distribution segment. By improving economic efficiency, companies focus on reducing their operational costs due to tariff regulation being controlled by the government. To achieve a positive relationship with cost determinants that can contribute to the effective use of their resources, companies have sought to improve their compliance [12] by adhering to implemented Corporate Governance guidelines. However, studies such as those by [PERSON] et al. [13] have found that companies with satisfactory levels of corporate governance are not necessarily more efficient than others. It is noteworthy that by measuring the efficiency of piped gas distribution companies, there are perspectives to guide discussions on tariffs, providing a significant understanding of the use of resources, setting standards for improvements and quality in service delivery, as well as defining comparative efficiency measures for evaluation. In this regard, the use of efficiency frontiers, which is extensively explored in the computation of these measures, is possible. Based on what has been presented, given a sector with characteristics of a natural monopoly, the need to understand its efficiency levels, and regulation that provides a free and open market with options for society, this work aims to achieve the objective of analyzing the relevance of governance (corporate and ownership concentration) to the divisional inter-temporal dynamic efficiency in piped natural gas utilities in Brazil. In this context, by conducting this study, we will provide an important contribution to the analysis of the Brazilian piped gas sector, in which efficiency will be measured through the application of a dynamic intertemporal network perspective. To strengthen the findings, the central hypothesis, discussed based on the presented problem, will provide an opportunity to determine whether governance is positively associated with the efficiency of piped gas distributors. Currently, the largest onshore producers are the Solimoes (Amazonas) and Parnaiba (Maranhao) basins.