By William Jones, Contributing Reporter
RIO DE JANEIRO, BRAZIL – Brazil is facing a distinct possibility of experiencing power and water rationing due the severe drought that the country has been experiencing since the beginning of the year, according to a report published by energy analysts from BTG Pactual, a Brazilian investment bank.
The lack of rain, which is responsible for emptying dams and reservoirs across the country, represents Brazil’s worst drought in forty years. This has led experts from BTG Pactual, investors and trading specialists, to suggest that energy rationing would be “prudent,” especially due to the fact that hydroelectric power plants provide somewhere in the region of seventy percent of Brazil’s power.
Reserve levels may fall to as low as fourteen percent by November, making energy rationing between May and October a “prudent” policy, BTG analysts led by Carlos Sequeira in Rio de Janeiro said. “There is no question that risks of energy rationing are real and rising,” said the report. “Demand is now higher and the pace of deterioration is alarming,” it read.
Power and water rationing were last enforced during Brazil’s 2001 energy crisis and according to the report published yesterday by BTG, the current drought has drained southeastern hydroelectric dams to their lowest levels in over a decade. Furthermore, the report also suggests that should a form of rationing be introduced it could have the potential to destabilize production in affected areas, while saying that the government is unlikely to implement such a “radical” strategy ahead of elections.
Parts of the country are being forced to rely on more expensive thermoelectric power as a way of dealing with the currest crisis. In response to meeting Brazil’s higher electricity bills, the government issued R$12 billion of aid to energy providers in an attempt to protect consumers from being saddled with the volatile energy prices caused by the drought.
According to a report published by Folha de São Paulo newspaper last month, the country’s rivers and streams are the driest they have been in twenty years. Water utility company of São Paulo, SABESP, described the situation as “critical” as rainfall in January this year was at its lowest level in 84 years.
Read more (in Portuguese).
* The Rio Times Daily Updates feature is offered to help keep you up-to-date with important news as it happens.