Brazil tackles energy crisis with $30 million investment

A third of Brazil’s total infrastructure investment over the next six months will go into energy projects in order to tackle the country’s energy crisis, according to Brazil’s State Secretary of Planning, Jose da Silveira, in a recent speech.

The government plans to invest $30bn in energy projects over the next six-month period to construct 22 thermoelectric plants and 7000 km of transmission lines said

da Silveira. He also announced the construction of 15 hydroelectric plants next year, with energy production capability of 11,000 MW.

The Brazilian government announced a rationing plan last Friday in the face of the electricity energy crisis, which is affecting the life of millions of people and the economic growth in different regions of the South American country. The rationing plan, which will come into effect June 1, is expected to last until November.

The government will enforce a quota system for different consumers to reduce electricity consumption by 20 per cent, although no immediate blackouts are planned. Industrial consumers have been preparing for the rationing by importing products from overseas subsidiaries, renting generators and reducing working hours.

The energy crisis has forced the Sao Paulo state government to postpone the sale of Companhia Energetica de Sao Paulo (Cesp), the country’s third largest power generator. Combined with the energy shortage, this helped push the Brazilian real to an all-time low against the dollar.

Brazil is heavily dependent on hydropower to meet its needs and low rainfall has caused reservoir levels to fall considerably, especially in the south-east.

Brazil has estimated that it requires some 25 000 MW of new generating capacity over the next five years and is trying to encourage foreign investment in its power sector. General Electric International was recently awarded a $100 million contract by Termogaucha-Usina Termelectrica S/A to supply equipment and associated services to a new 500 MW plant in southern Brazil.

Other investors have called on the government to implement a clear energy policy and increase tariffs. AES has put ten planned power projects, worth a combined $2.5bn, on hold.

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