Rio - Brazil could once again face electricity rationing in 2007 if investments are not made in the sector. According to the Rio de Janeiro Industrial Federation (Firjan), those investments will not come if the government does not establish clear rules this year. In 1999, Firjan correctly forecast the 2001 rationing period, pointing out its studies at that time revealed that reservoir levels were low and there no were alternative sources of electricity to substitute hydroelectric power plants. The country had to ration electricity for six months in 2001.

Firjan economist, Adilson de Oliveira, says that the new study takes into consideration the government's own projections of 5% GDP growth over the next two years. That alone will require an additional 4,000 MW of electricity.

Oliveira says a shortfall is in the offing for the second half of 2007 if the sector does not get annual investments totalling US$3.5 billion to US$4 billion between now and 2007.

Without those investments and if rainfall in 2005/2006 is below average, says Firjan, the shortfall will reach 7% in the Southeast region of Brazil, and 10% in the Northeast. If there is less rainfall in 2007, the situation will be worse: the shortfall in the Southeast will be 12% and in the Northeast 17%.

Oliveira declared that the minister of Mines and Energy, Dilma Rousseff, has to announce the new regulations for the sector as soon as possible so investors can make their plans. He points out that it takes three years to build a thermoelectric plant and five years for a hydroelectric plant.

Agência Brasil
Reporter: Cristiane Ribeiro
Translator: Allen Bennett
26/07/2004