Brazil Boosts Utility Drought Relief With $5 Billion Aid
Brazil unveiled a 12 billion-real ($5.1 billion) aid package for utilities to cope with record-high spot prices as a drought cuts hydroelectric output.
Measures include an additional 4 billion reais from Treasury to help distributors pay their spot-market commitments, as much as 8 billion reais in financing via the country’s electricity trading board and power auctions starting in April, Finance Minister Guido Mantega and Deputy Energy Minister Marcio Zimmermann told reporters in Brasilia today. The additional Treasury subsidies will require tax increases.
The most severe drought in at least four decades has reduced southeastern hydroelectric dam levels to the lowest since 2001, when Brazil was forced to ration power. That’s forcing the country to rely more on higher-cost thermoelectric generation, pushing up spot power costs to record levels. Brazil’s Ibovespa Electricity index is down 11 percent this year, with all but one of its 15 members posting losses.