MercoPress. South Atlantic News Agency

Specter of energy rationing looms heavily over Brazil

Brazil's Energy Minister denied reports Wednesday that a short supply of natural gas from Bolivia and a lack of rain might force Brazil, which relies heavily on hydroelectric power, to ration energy later this year

Nelson Hubner said Brazil's situation today is "very different from 2001," when the low level of water in dam reservations forced the government to ration energy. "There's no cause for alarm," he told the government news agency Agencia Brasil. Jerson Kelman, general director of the national electric energy agency, raised the specter of rationing in an interview with the O Globo newspaper of Rio de Janeiro: "It's not impossible we'll need rationing this year, but it's most probable we won't". Rainfall in the beginning of January was 55% lower than usual, O Globo said, and low reservoir levels prompted officials to switch on all thermoelectric power plants to reduce the strain on hydroelectric dams that generate more than 80% of its electric energy. But Kelman said that Brazil's state-run oil company, Petrobras, does not have enough natural gas to fuel the thermoelectric plants, mainly because of rising domestic demand and supply hurdles in Bolivia, which provides 50% of Brazil's gas. Hubner said "the main rainy season" began just 10 days ago and that weather predictions indicate "normal" rainfall through April. He said the government's decision to switch on thermoelectric plants in December guaranteed more than enough energy to cover demand. However some energy experts who have been warning of a potential energy shortage beginning 2009 said that an unexpected dry season in the southeast and north east of the country "had advanced such a possibility". "I believe Kelman said the truth. If you ask me about rationing I couldn't say so, but the risk exists", said Adriano Pires from the Brazilian Infrastructure Center. "Insufficient rainfall, insufficient gas, and Brazil is growing. The longer the government tries to hide the situation, it can only become worse. They must begin an energy saving campaign but that has a political cost. However mandatory rationing is worse", added Pires. Energy prices in the short term in the non regulated market shot up in the last weeks to 269 US dollars/MW, 18 times higher than in January 2007. Last year Petrobras had to limit the supply of natural gas to some private distributors so as to ensure thermoelectric plants' provision. A paper from the influential National Confederation of Industry indicated Brazil would experience a deficit of 15 million cubic meters of gas annually until 2010 Brazil's generating capacity is in the range of 90.000 MW, but has not grown much since the rationing of energy in the 2001/02 drought which hit severely energy companies.