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Brazil Electric Power Energy
Electric Power
In 1950 Brazil's capacity to generate electricity was only 1.9 million
kilowatts, and most of the required petroleum products had to be
imported. An adequate supply of electric energy became critical,
both for production and for a rapidly growing urban population.
Petroleum
requirements expanded quickly because of the decision to make the
automobile industry the mainstay of import-substitution industrialization
and because of the heavy reliance on trucks for short- and long-distance
transportation.
Ambitious road-building programs were implemented, and the domestic
automobile industry quickly expanded the stock of motor vehicles,
reaching 1.05 million units in 1960, 3.1 million units in 1970,
and 10.8 million units in 1980.
Low electricity prices stemmed from the substitution policy and
from the attempt to control inflation by restraining the increase
in public-sector prices in nominal terms. Thus, the capacity of
the electricity sector to generate resources for investment was
affected considerably. As a result of federally induced borrowing
in the late 1970s and early 1980s, the sector was also heavily indebted.
Intermittent adjustments in electricity prices allowed the sector
to generate profits and thus some resources for investment. However,
on occasion, the government returned to the practice of manipulating
consumer prices to contain inflation.
Although the federal treasury initially assumed many of the cost
distortions of the energy policy, by the end of the 1980s the virtual
bankruptcy of the public sector precluded this approach. In the
early 1990s, the government implemented a series of measures to
reduce its role. It introduced deregulation, market reforms, and
privatization,
but these reforms did not change the essence of the energy policy.
Interest groups prevented the adoption of measures that would drastically
alter the liquid combustible policy, and the agency controlling
electric energy continued to lack resources for investments. Thus,
the energy price structure was altered only marginally.
Low electricity prices induced a considerable substitution of electricity
for other sources of energy and the expansion of electricity-intensive
production, such as aluminum. The heavy investments in hydroelectricity
of the 1970s and 1980s matured, creating a considerable generating
capacity (50,500 million megawatts or 93.3 percent of the total
generating capacity of electricity in 1993). One of the world's
leading producers of hydroelectric power, Brazil has a potential
of 106,500 to 127,868 megawatts, or, according to the World Factbook
1996 , 55,130,000 kilowatts. The country's two largest operating
hydroelectric power stations are the 12,600-megawatt Itaipu Dam,
the world's largest dam, on the Rio Paraná in the South,
and the Tucuruí Dam in Pará, in the North Region (see
fig. 3).
In principle, an increase in the generating capacity for electricity
should have been easy to achieve. Brazil has enormous hydroelectric
potential, and investments in the sector were forthcoming, although
with an initial delay. However, until 1995 nationalistic considerations
excluded foreign capital from the electric energy sector, and regulatory
obstacles prevented domestic private investment. The federal and
state governments were therefore left with the task of expanding
the generating capacity. As of the early 1990s, the government continued
to control the sector's production end, as well as transmission
and distribution, although privatization of the sector is under
consideration.
Data as of April 1997
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