Brazilian government grants $5.1bn boost to power sector

The Brazilian government has launched a $5.1bn aid package aimed at its electricity sector in a bid to protect consumers from price increases.
Dilma Rousseff
The country is getting to grips with the worst drought to affect the country in 40 years, a scenario which has forced distributors to switch to more expensive thermal power after usually dominant hydropower plants began to falter.

With presidential elections coming up the government, led by Dilma Rousseff (pictured), wishes to avoid passing on the higher costs. Instead, finance minister Guido Mantega announced a series of measures late on Thursday to spread out the costs between the electricity sector, the government and consumers, bringing much-needed financial relief to utilities and putting off rate increases until 2015.

The FT reports that the Treasury will provide an extra R$4bn ($1.69bn) to power companies, in addition to the R$9bn already in the budget, so they can meet their financial commitments.

Meanwhile, the country’s wholesale power trading board, CCEE, will be authorised to raise R$8bn in the market to provide financing to the electricity companies, which can be paid back later by gradually increasing energy bills.

For more Latin American power generation news



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