Brazil Expected to Cut Energy Prices

By Ben Tavener, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Brazilian President Dilma Rousseff is widely expected to unveil a plan to reduce energy bills, for industry and consumers, aimed at helping to stimulate the country’s struggling economy. She has also promised to clear “logistical bottlenecks”, which she says are hindering development and foreign investment in the country’s economy, in a further bid to increase market competitiveness.

President Dilma Rousseff giving speech at 2012 CDES meeting, Brazil News

Speaking at the 2012 CDES meeting, President Rousseff said cutting energy prices and concessions of ports and airports were the next strategy in her program to boost the economy, photo by Wilson Dias/ABr.

A number of sources have said that average cut for industry will be around seventeen percent, and around ten percent for private consumers. It is expected the president will make the announcement before the September 7th Independence Day public holiday.

Speaking at the Council for Social and Economic Development (CDES) last week, President Rousseff said a reduction in the price of energy was the next step to stimulate growth, following on from historic reductions in interest rates.

Industry leaders – particularly those in metal and vehicle production – have long complained about high energy costs, fifty percent of which they say are surcharges and taxes.

Acknowledging the “adverse” state of the economy, the president said the government wants to increase investments in Brazil’s inadequate infrastructure and reduce production costs to give Brazil a better chance at competing globally:

“Increasing our competitiveness is vital for us to assure we can maintain levels of employment, income and quality social services, in a sustainable way, for all Brazilians. We can not be a fair country if we cannot be a competitive one.”

This is all part of the government’s battle against the operational difficulties and overheads dubbed the “Brazil cost” by economists, which are experienced by those trying to run or open a business here. These extra hurdles, as well as other challenges such as the low number of specialized workers available, are seen by experts as constraining development and foreign investment.

Aluminum production line with high energy costs, Brazil News

Energy-intensive aluminum production companies have been among the most vocal about Brazil’s overly high energy prices – which they say are fifty percent tax and surcharges, photo by jurvetson/Flickr Creative Commons License.

However President Rousseff, a trained economist, said the country’s “recipe for growth” – one of increased production and investments and strong social policies – would not deviate from its course, praising the country’s “more civilized” interest rates and the increasingly favorable exchange rate.

Business figures interviewed by The Rio Times have said the raft of new stimulus packages brought forward by the government in recent times have been a positive sign but whether the long-awaited results would come has yet to be seen:

“All this news is very refreshing; I am impressed at the sudden injection of gumption with regard to all aspects of infrastructure investment,” said David Lorimer, director of Rio-based trade consultancy firm Datamar.

The government has also offered tax breaks for specific areas of Brazilian industry, set to total around R$6 billion (US$3 billion) in 2012-13 in waived tax revenues including slashed IPI tax on industrialized products such as cars and domestic appliances, O Globo newspaper reported.

The president now seems to have her sights squarely set on providing Brazil with revamped infrastructure, capable of delivering a more competitive edge to the country’s economy. Following the recent creation of the government’s Empresa de Planejamento e Logística (Planning and Logistics Company, EPL) to help implement the infrastructure improvement plans, it is now expected that concessions to private companies for infrastructure projects on railways and roads will be extended to ports and airports in the coming weeks.

8 Responses to "Brazil Expected to Cut Energy Prices"

  1. Craig Wilson  September 5, 2012 at 3:55 PM

    I think that would be great for Brazil…taxes are just crazy there, I don’t understand how they make it with everything subjected to taxes…getting rid of all the redtape would do wonders for that country, I wish them well!!!

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  3. Andre Claessen  September 8, 2012 at 3:28 PM

    I would wish Mrs. Roussef would stop not only the high energy prizes, but also the High Rate of Amanzonia Destruction! Why does she allow the destruction of Mother Nature, f.i. in Matto Grosso state.
    Its a disaster for nature, the rainforest is rapidly destroyed for the sake of money. Trees of 500 years old are destroyed.. It will take hundreds of years before a tree like this is back. Can we wait for this? Ofcourse not, climate is already rapidly changing.
    And what do We do? Even more destruction of Mother Nature, of the Amazone: destruction of the rainforest for timber and what about the Dam Brasil is building, forest and inhabitants and anmimal will dissapear.

    I hope mrs. Dilma Roussef will care for Mother Nature and for our children, the next generation. What will be left for them? A polluted world with a lack of fresh air since no more trees to support this. A climatechange we can hardly think of.
    Please mrs. Dilma Roussef, do not destroy our Mother Nature. We cannot buy trees of 500 years to replace them, it will take hundreds of years to replace them. Money is worthless in this case. We can only preserve the nature we have. Mother Nature is already severely harmed, mistreated, beaten to death and destruction, and still is Mother Nature strugling to survive. And what do we do? We do not care. We do not want to see the climatechange and hazardness of the climatechanges. Will we ever stop to mistreat Mother Nature, before its too late for human nature…?

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  6. Willard Mubvumbi  September 25, 2012 at 9:41 AM

    @Andrei, well said. Good comment.

  7. Mauro Balbino  September 25, 2012 at 10:26 PM

    During 2002 and 2010 energy suppliers in Brazil billed their consumers with rates proved wrong.
    Initially, the figure was thought to be around R$7 billions, but now specialists fear that it can overtake the R$ 11 billions barrier.
    The minister of TCU (Tribunal de Contas da União), Valmir Campello, ordered Aneel (Agência Nacional de Energia Elétrica)to review authorized energy prices that had been overrated unlawfully.
    The Government has not this money to give back to people, so in a typical PR exercise, the President announced the reduction…

    Among several examples, please do check:
    http://www1.folha.uol.com.br/mercado/1133954-relator-manda-devolver-dinheiro-nas-contas-de-luz-mas-decisao-e-adiada.shtml

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