Brazil - A Struggling Giant
Electricity Abroad In the latest report in our series on international electricity markets, Vincent DeVeau looks at Brazil's efforts to expand its generating and transmission capacity to make electricity available to all while simultaneously keeping pace with its expanding economy.
Brazil is the largest and most populous country in South America. With vast natural resources and an enormous labour pool, it is also South America's leading economic power, with large, well-developed agricultural, mining, manufacturing and service sectors. However, the highly unequal distribution of wealth remains a pressing social and political problem.
Reforms in the energy sector were part of a broader reform of the Brazilian economy which took place in the 1990s. After 20 years of military rule, a new constitution adopted in 1988 laid the foundation for democracy. Successive governments supported liberalizing policies, and, as part of this process, infrastructure development - including the generation and distribution of electricity - was opened up to the private sector.
The 1988 Brazilian Constitution specifically identifies the distribution of electricity to be an essential public service for which the Federal Government holds full responsibility either directly or through concessions. However, lack of electricity access is still a fact of life for many rural, and even urban, households.
Brazil is the world's 10th largest producer of electricity and accounts for about 2.2 per cent of total annual global electricity generation. Its consumption also ranks as 10th greatest in the world, accounting for roughly 2.4 per cent of the world's annual electricity consumption.
A continuing problem has been that generation has lagged behind consumption for many years, and as a result, Brazil has been forced to import a significant amount of power. Electricity demand is projected to increase at an annual rate of 3.6 per cent through the next 10 years.
Because of its vast size and unique geography, the Brazilian electricity sector is actually divided into two large systems, one of them interlinked and the other isolated. The first, with some 80,000 megawatts capacity, includes the Northeast-Southeast-South transmission line feeding the major coastal urban centres. The isolated system includes small local grids mainly in the northern Amazon region. The electricity supply of these off-grid systems is based on diesel generators. There is an enormous consumption of diesel with nearly 1,000 power plants supplying electricity to isolated cities and villages in the Amazon using diesel oil.
On the other hand, about 85 per cent of Brazil's electrical generating capacity is hydroelectric, with more than 60 hydroelectric facilities of at least 100 megawatts, making the country the fourth largest in the world in hydroelectric capacity, exceeded only by China, the United States, and Canada.
Brazil's largest hydroelectric facility is the Itiapu Power Plant, located on the Parana River and operated jointly with Paraguay, which, at more than 12,000 megawatts in capacity, is the world's largest. While keeping pace with the growing economy and population remains a critical issue, overall Brazil's total generating capacity has increased by about 50 per cent in the past decade, with more under construction or in planning stages.
In 1993, a total restructuring of the industry was undertaken, unbundling the generation, transmission and distribution components of the existing companies, followed by the privatization of most distribution facilities and some of the generation capacity.
Despite these efforts, nearly 31 per cent of the Brazilian rural population still has no access to electricity. Low-income populations in many urban areas also lack access, and out of the 5,507 Brazilian municipalities, only 214 can boast availability of power to all households.
The Federal Government has undertaken a number of initiatives to promote rural electrification and expects to provide full electrification by 2008. In 2003, the Brazilian Government announced the 'Luz para Todos' (Light for All) Program to supply electricity throughout Brazil to 12 million people as yet unconnected to any transmission grid. The main objective of 'Luz para Todos' is social inclusion through access to electricity supply.
The Brazilian national economy is expected to grow at an annual rate of 5 per cent over the next five years, and the electricity sector will have to work flat-out if it is not to become a bottleneck on the path to progress and prosperity. EM
