MercoPress. South Atlantic News Agency

Uruguay's energy situation “delicate but not critical”

Uruguay River

Uruguay's energy situation is “delicate, but not critical”, however demand is higher than estimated and water reserves although sufficient are not being replenished as would be desirable admitted the country's head of the government owned electricity corporation.

"So far we've had no problems providing all the electricity demanded", said Gerardo Rey head of UTE, Uruguay's electricity company, but "scarce rains, high temperatures are limiting our hydroelectric potential and UTE must appeal to thermal energy which is much dearer". Rey said additional thermal energy is costing Uruguay 2 million US dollars per day. UTE had estimated that residential demand for electricity would increase in the range of 2.8% in 2008 (9.143 GW), but January consumption has shown "how conservative our estimates have been", admitted Rey. Demand actually increased 4.7%. Based on these assumptions UTE had estimated that thermal generation would cost 340 million US dollars in 2008, up 47% from last year's 240 million. UTE numbers show that for a normal 2008, Uruguay would have to spend 36 million US dollars in hydraulic generation; 213 million for thermal; 78 million for international exchanges (with neighboring Argentina and Brazil) and 15 million for autonomous private generation plants that turn over their surplus to the national grid. Mr. Rey also admits another flaw in the estimates, which for Uruguay entirely oil dependent is serious. The numbers were calculated with a barrel of crude costing an average 80 US dollars during 2008, but this week oil soared over the 100 US dollar benchmark with prospects of further volatility if as seasonally occurs, OPEC decides to cut its production for the northern hemisphere spring. "Our advisors and the analysts we consulted said that a US recession would have an impact in commodities prices including oil, and anticipated 80 US dollars a barrel, which is considered the market break even point. They insist the extra 20 dollars can only be attributed to international speculation", added Rey according to the Montevideo press. Rey also pointed out that insufficient rainfall is eroding water reserves in Uruguay's main four dams' lakes. "We're hopeful the situation changes in the coming months and our meteorologists are better forecasters than our financial experts".