By Mario Osava
RIO DE JANEIRO, May 2 2001 (IPS)

Brazil plans to start rationing electricity in June, say authorities, whose plans have run up against resistance by industry.

The proposal to be studied on May 8 by the interministerial National Council on Energy Policy will entail the setting of quotas for industrial, commercial and residential areas, in order to reduce electricity consumption by at least 15 percent.

Consumers exceeding the quotas will be subject to heavy fines. Excess electricity usage will be billed at five to 15 times the current rate – in other words, a 400 to 1,400 percent increase, with the biggest hikes applying to the biggest consumers.

If the measures fail to bring about the hoped-for results, scheduled power outages will begin to be implemented in July as part of a programme that will cover southeastern, central-eastern and northeastern Brazil.

The measure is “inevitable,” Minister of Mines and Energy José Jorge admitted. He explained that the rains expected this month in the regions in question did not show up, which meant the water reservoirs of power plants – the main source of energy in Brazil – were not refilled.

In order for the power plants to get this country of 170 million, Latin America’s largest, through the dry months from May to October, the water level in the reservoirs would have to stand at 49 percent of capacity.

But today the level stands at just 33 percent of capacity, said Mario Santos, president of the National Operator of the Electric System, the agency that monitors the generation and distribution of electricity.

The mandatory energy rationing programme that the government plans to put into effect as of Jun 1 will set monthly quotas 15 to 20 percent lower than consumption levels posted in the same month last year by each company or household.

But business representatives like Pedro Krepel with the Federation of Industries of Sao Paulo complain that it is “unfair” to impose across-the-board cuts, which will have a greater impact on those consumers who have already been trying to conserve energy.

Companies that have already begun to implement their own energy savings measures will face bigger problems than their competitors, and will be forced to cut production, argued Krepel.

The business community maintains that the government plan will cause a drop in productive activity and a subsequent rise in unemployment.

In the first quarter of the year, the National Confederation of Industry registered an even sharper drop in production, in the creation of jobs and in sales than is usual in the first few months of the year.

The likelihood that a rationing plan would have to be adopted was one of the reasons for that fall, along with the economic crisis in neighbouring Argentina – Brazil’s partner in the Mercosur trade bloc – and the political problems facing the coalition that backs the government of Fernando Henrique Cardoso, said Carlos Moreira Ferreira, the president of the National Confederation.

Brazilian Energy Secretary Afonso Moreira Santos, meanwhile, added fuel to the fire when he stated that if blackouts became necessary, only the areas to be affected and the day on which they would occur, but not the exact time, would be announced beforehand, for “security reasons.”

Previous knowledge of the location and timing of power outages would encourage looting, said the official.

But that will just compound the losses suffered by companies, which will not be able to plan around the blackouts and adapt their activities accordingly, protested Petronio Zica of the Federation of Industries of the state of Minas Gerais, one of Brazil’s main industrial regions, second only to Sao Paulo.

The government plans to step up an ongoing campaign exhorting Brazilians to save energy by modifying their habits and daily schedules and routines. One recommendation is the use of fluorescent lightbulbs, which consume less energy and will be distributed free among the poor.

Critics of the government’s energy policy, like physicist Luis Pinguelli Rosa at the Federal University of Rio de Janeiro, began to warn last year of severe power shortages.

A lack of investment by the state and uncertainty regarding plans for privatisations in the sector kept the generation of electricity from keeping up with economic growth. Energy consumption in Brazil traditionally grows one to two percentage points ahead of Gross Domestic Product (GDP).

With last year’s 4.2 percent rise in GDP, and forecasts for a repeat performance this year, the country’s electricity generating capacity would have to increase by more than 10 percent.

A programme to install 49 thermoelectric plants to run on natural gas imported from Bolivia has been held up by a lack of private sector investment, given the uncertainty with respect to fuel costs spurred by the instability of Brazil’s exchange rate.

But energy shortages had become inevitable, and the poor rains in the wet season have merely aggravated the problem, say critics.

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