Bloomberg News

Brazil Sees No Chance of Cutting Gas Supplies to Industry Users

January 09, 2013

Brazil’s Energy Minister ruled out diverting natural gas used by industry to feed thermoelectric plants, saying power supply in Latin America’s biggest economy is assured.

Speaking after a monthly meeting with government officials today, Edison Lobao said thermal generation can fill the supply gap as low dam levels constrain hydroelectric output. If gas- fired plants continue to operate at full capacity throughout this year, prices increases would be capped at about 3 percent, he told reporters.

Thermoelectric plants are generating 14,000 megawatts to avert shortages after water reservoir levels in northeastern Brazil fell to 32 percent, less than the 34 percent minimum the government considers safe for the region’s plants to operate, according to data on the national power grid operator’s website.

“There is no possibility that gas to be used for industries be diverted to thermo plants,” Lobao said. “In our meeting today there was a confirmation of our tranquility that the country has a firm energy inventory, security and is in conditions to fulfill every need.”

If thermoelectric plants can be shut down earlier, the cost to consumers would increase by about 1 percent, Lobao said. Thermoelectric generation may be reduced in April if there’s enough rain in the coming months, he said.

Brazil adopted a rationing plan in 2001 after hydropower dams fell below levels deemed safe. President Dilma Rousseff, in her former role as energy minister, organized auctions to build more dams and gas-fired plants.

To contact the reporter on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net


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