Eletrobras, the Brazilian state-owned electricity transmission utility, has been given the go ahead to invest 1.15 billion reais ($465 million) to expand its electricity generation and transmission capacities amid an acute energy crisis.

A statement by President Fernando Henrique Cardoso’s press office said the president had personally authorized the investment, which is part of the government’s emergency programme aimed at combating the power shortage.

The money would be provided by companies forming Eletrobras, the holding itself and “other long-term resources”, the statement said.

Last month, the government came up with a three-year plan worth nearly $13 billion to expand the country’s generation capacity in order to avoid energy shortages in the future.

Droughts and years of poor management in the electricity sector have dried up water reservoirs at power stations across Latin America’s largest country, which relies on hydroelectric power plants for 92 per cent of its electricity. Electricity demand grew by 55 per cent between 1990 and 1999 while installed generation only rose by 25 per cent during the same period.

In June, the government was forced to impose tough electricity rationing, which now affects nearly all of the country, to reduce by 20 per cent electricity consumption to avoid crippling blackouts. Rationing, which affected both domestic and industrial consumers, is expected to continue until at least the end of 2001.

Out of the money freed up on Thursday, Eletrobras’ Eletronorte unit, operating in the north of the country, will get the biggest chunk – 330 million reais – to expand the capacities of its Tucurui hydroelectric plant and build three transmission systems.

Among other projects, Eletrobras will get 64 million reais for the construction of a power link between Brazil and Uruguay.

The holding’s nuclear power unit, Eletronuclear, will receive 43 million reais for maintenance of its Angra 1 power plant and completion of works at Angra 2. No decision has been taken so far on the proposed construction of the third power reactor in Angra dos Reis near Rio de Janeiro.