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Latin America – Electric Power News Briefs

Brazil’s new interconnector with Venezuela was recently inaugurated by President Mr. Fernando Henrique Cardoso. It will allow for the supply of energy for the Roraima region over the next 20 years. The facility cost $185m with Venezuela investing $130 and Brazil $55m. The Guri-Macagua facility will supply 200 MW. The acquisition of energy will make possible the phase out of thermal electric power facilities, which use diesel oil and consume $4m per year.

Mexican electricity reform will not include selling off Mexico’s state-owned power facility the Federal Electricity Commission (CFE), President Vicente Fox said. However, there was a place for private industry in the electricity reform required by the country. Fox said the reforms that have to be made in the electricity sector will make it more efficient and competitive, and “we will do it with the co-operation of the workers and political actors,” reported Mexico City daily el Economista. “The generation of electric energy is vital and indispensable to the development of the country. It’s true that we should invest also in leading-edge technologies that respect the environment, and we will do it all with you,” he said.

Foreign investment in Brazil has been adversely affected by the strong dollar, the power rationing program and the lack of regulations in the electric power. According to market sources at least six power sector business were suspended. Deals affected included the possible sale off of Elektro for $700m, currently held by Enron. The company is controlled by the US AES that held 3.27 per cent stake in Eletropaulo in 1998 and is expanding its participation to 70 per cent in the company. Also affected is the construction of the major thermal electric power facility of Brazil, the Uruguaiana and acquired stakes in of AES Sul by Cemig.

Mexico’s electricity reserve margin at s state-owned power utility the Federal Electricity Commission (CFE) increased to 27 per cent, due to a slowdown in the economy and the construction of new generating plants, said CFE head Alredo Elias Ayub. In the first half of the year, the demand for electricity grew by 2.5 per cent, and is not expected to grow much for the rest of the year, he said. “The reserve margin will stay just above 27 per cent. We should maintain it like that, and we also have plants programmed for 2005,” he told Mexico City daily Reforma. The iron and steel industry, as well as the manufacturing industry, like industry in general, have reduced their electricity consumption, he said. The industrial sector is continuing to consume 40 per cent of the nation’s electricity.

Eletropaulo Metropolintana and Light may report extraordinary gains due to the energy rationing program, according to Fator Doria Atherino. The US AES, that holds interests in both the Brazilian electric power companies, already reported the profits in the US balance. Fator pointed out that Eletropaulo may reach a gain of R$128m ($52m) in 2001 second quarter and R$1.54bn if the program lasts for 12 months. Light may report a positive result of R$75m in the period and R$908m within one year.

Duke Energy and AES Tiete did not consider the payment of distribution companies, while Eletropaulo and Cataguazes Leopoldina opted for the creation of a provision when preparing their respective balance sheets. An absence of clear accounting practice for the Brazilian electric power sector led the companies to adopt different criteria. In addition, Cemig decided to present its performance after the definitions of the sector. Specialists believe the sector will claim a R$15bn deficit due to the energy power rationing programme for the year to December 2001.

The Consorcio Transmantaro consortium, which operates the power transmission line between Mantaro and Socabaya, plans to raise $30m through a bonds issue. The operation, scheduled for the end of this month or early next month, is aimed at refinancing current and non-current liabilities. Besides that bonds issue, the consortium is also considering taking out a loan from the same banks (Citibank, Banco de Credito, Banco Continental and Banco Wiese Sudameris) that financed the construction of the power transmission line, which demanded investments of $95m. Hydro Quebec (56.7 per cent), Fonds de Solidarite des Travailleurs du Quebec (28.3 per cent) and Etecen (15 per cent) formed Consorcio Transmantaro.

Banif Primus is waiting on the approval of CVM (Comissao de Valores Mobiliarios) to launch an investment fund of R$100m – R$150m for expansion projects in electric power sector. According to Mr Breno Salomao officer of Banif Primus, the fund will also benefit co-generating and thermal electric power projects.