Brazil's Workers Party envisages state investments in power sector

Brazil's Workers Party (PT) envisages state investments in the power sector of $ 2 bn a year during its four-year term, which starts January 1, PT energy advisor Luiz Pinguelli said. The investment program is essential to overcome the shortfall in energy predicted for 2004-2005 if GDP grows by 5-6 % a year, he said, speaking at the 2nd National Electric Power Forum in Sao Paulo.
The main instruments for investment will be federal power company Eletrobras and its subsidiaries, which have very low levels of indebtedness, Pinguelli said, repeating once again the PT's view that further privatisation is out of the question. The incoming government of president-elect Luiz Inacio Lula da Silva plans to renegotiate terms with the International Monetary Fund (IMF) to remove these companies from the government's primary fiscal surplus targets to allow them to issue debt, Pinguelli said.

The transition team for the future government has also been in touch with international sources of financing, including US investment banks, and all have expressed their willingness to work with the PT, Pinguelli said.
The PT also plans to "renationalise" Brazil's national development bank BNDES, Pinguelli said, referring to a certain emphasis on lending to foreign companies that has prevailed at the bank in recent years. The BNDES provided foreign companies with loans to buy Brazilian companies during their privatisation.

"This is not to say we won't finance foreign companies but it must be to the benefit of Brazil," Pinguelli said. “The emphasis will be focused back on financing Brazilian companies,” he said.
“Once it takes office the PT must move fast to resolve the immediate problems,” said Pinguelli, who in common with former Rio Grande do Sul state energy secretary Dilma Rousseff, is being tipped as future energy minister. "Once this difficult period of interregnum is over, the PT must then hit the accelerator," he said.
“The new government can begin to pass laws and resolutions within the first six months, so as to make the most of its four years in government,” he said. As well as the investment program, the government must quickly resolve the financing problems facing distributors, particularly their outstanding debts with generators.