The Brazilian National Development Bank (BDNES) announced Wednesday an enhancement to its funding programme for electricity generation projects in the country. BNDES will extend financing for the import of equipment or machinery needed for generation or transmission projects provided it is not undermining any Brazilian competitors.

BDNES is the chief federal agency for long-term funding which aims at promote the country’s development. The move to help the power sector is a response to the worst power crisis Brazil has faced in decades. The hydro-dependent country has insufficient generating capability due to a severe drought and failure to keep up with increasing electricity demand by building new power plants.

In June, the government introduced a rationing plan calling for a 20 per cent reduction in consumption from both domestic and industrial consumers.

BNDES said it would increase the amount of financing it will provide for generation, cogeneration, transmission and energy efficiency projects. In many cases BNDES’s stake will double and in others the bank will finance the entire project.

The government has been promoting investment in alternative forms of electricity generation, especially thermoelectric generation, and more extensive transmission networks to try to alleviate the problem.

On Wednesday, BNDES also lengthened the maturity on the loans to a maximum of 12 years.

“They are small adjustments and enhancements of existing programs to make them more attractive,” said Octavio Castello Branco, BNDES infrastructure director.

The bank plans to lend 1.7bn Brazilian Reals ($682m) in financing for energy projects this year, up from initial estimates of 1.2bn Brazilian Reals ($578m). In the long term, BNDES expects to extend a total of 18.2bn Brazilian Reals ($7.3bn) to generate another 10 500 MW of energy, but the approval for plans has been slow.