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Volume 2, issue #9 - 04-04-1997
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sponsored by:
Brazil close to defining rules for electricity sector
Mar. 18, 1997 Brazil is close to defining new rules for its increasingly private-owned electricity sector, a big step towards the privatisation of federal generating companies set to begin this year. "Above all else, the model will be defined to minimise the risk for investors," National Energy Secretary Peter Greiner said.
The Brazilian government has already privatised two federally owned distributing companies, Light and Escelsa, and intends to sell generators Furnas and Eletrosul in 1997. Eletronorte and CHESF could be sold in 1998.
Last year, the government commissioned London-based consultants Coopers & Lybrand to advise on the restructuring of the country's power industry. Greiner said a final report should be ready by the end of April but most of its main points have been discussed at length with the government and were as follows:
- the power industry should be "deverticalised" by separating the transmission assets of federal and state-level power companies from their generating capacity.By isolating transmission, Brazil would ensure free access for generators to the transmission grid. Transmission would be concentrated in two publicly owned companies, one serving Brazil's south and south-east, the other operating in the north and north-eastern regions. They could be privatised at a later date.
- the price of power generated by hydroelectric plants over 30 years-old would be locked into long-term supply contracts at special low rates, ranging from $ 12- $ 38 per MWh. That rule would help keep consumer tariffs down and was justified because the plants new owners would not need to make capital investments. Power from more recent plants and new ventures could be sold at market rates, currently around $ 28-$ 45 per MWh, stimulating investment.
