Prospect of rain will alleviate financial needs of Brazil’s power sector

SAO PAULO, Jan. 4 (Reuters) – Improved rain forecast could reduce the need for financial assistance from the power sector to offset rising costs of thermoelectric power generation, Reuters told Reuters. Brazilian Association of Electric Power Distributors (Abradee).

Lobby chairman Marcos Madureira said the amount of a new loan could be less than the 14 billion reais ($ 2.5 billion) deficit accumulated by the sector until November 2021.

The extent of the decrease will depend on the deficit estimates of the national grid operator ONS, he said.

In the absence of sufficient funds to pay for more expensive thermal power plants, the government authorized the sector in mid-December to contract new financing, but has not yet issued a decree specifying the conditions of the loans.

Earlier estimates of the financing needs stood at R $ 17 billion, due to the lack of rain which provided less water to supply the hydroelectric dams.

Madureira said distributors bear the burden of costs external to their business, resulting mainly from the water crisis, and that the matter needs special and speedy treatment.

The electricity sector had already contracted financing worth more than R $ 15 billion in 2020 with the support of the government to deal with the economic effects of the pandemic, which will be gradually transferred to the electricity tariff in coming years.

The ONS analysis is expected to be completed this week, along with the publication of the government decree that will detail the funding conditions, Madureira said.

The Ministry of Mines and Energy and the ONS did not immediately respond to requests for comment.

($ 1 = 5.6781 reais)

Reporting by Leticia Fucuchima; Editing by David Gregorio

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