Open the pages of a Brazilian broadsheet and it is rare nowadays not to find an article on the ?apagão? ? the Brazilian energy crisis. Although the demand centres of São Paulo and Rio de Janeiro are bearing the brunt, electricity rationing in Brazil is affecting everyone, from the micro-economic effects on companies and consumers, to the adverse macro-economic effects on the Brazilian economy.
The writing has been on the wall for some time. Brazil's 92% hydro-dependent electricity market has been seriously undermined by low precipitation over past years, while the inauguration of the Brazil-Bolivia natural gas pipeline in 1999 and increased natural gas-harvesting from Brazil's Campos Basin, failed to energise the much hoped development of gas-fired IPP's.
Brazil urgently needs more electrical capacity and the government is pinning its hopes on gas-fired thermoelectric projects to provide it under the guise of the ?PPT? ? the Thermoelectric Priority Programme. The PPT targets the construction of approximately 50 thermoelectric plants by the end of 2003 and the open-cycle operation of approximately 3000MW of gas-fired generation by the end of 2001. Although the time-frame for achieving the PPT's objectives is undoubtedly ambitious, there has been unprecedented IPP development progress in Brazil over the past 12 months which should see the open-cycle generation goal realised during 2002. An analysis of project sponsors and the project risk allocation models being utilised by them, is pivotal to understanding how such progress has come about.
Power projects currently being developed in Brazil demonstrate that there is a general...
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