Economy & Energy
Year III - No 12 Jauary/February 1999

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ollaoro.gif (978 bytes)Brazilian Energy Matrix
ollaoro.gif (978 bytes)Optimism in Times of Crises
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Editoração Eletrônic
Friday, 11 July 2003.

Optimism in Times of Crises

Genserico Encarnação Jr.
English Version
Frida Eidelman

In the face of the present situation of the world, national and state crisis, a dose of optimism is needed. Not the candid optimism mocked by Voltaire but a realistic, viable and possible one.

The crisis is certainly serious. It is difficult to inject optimism in a time of recession, unemployment, deficits and growing debts, high interest rates and overdue payments. This article does not aim at attenuating the situation, justifying errors or giving unfounded hopes.

The aim is to show that the state of Espirito Santo has a potential that, if well administered, may constitute the basis for a new cycle of economical and social development.


The first potential to be pointed out is energy. With the discovery of the natural gas reserves at the northern continental platform there is the possibility of at least duplicating the present production of 650 thousand cubic meters daily (m3/d). From the quantity added, 600 thousand m3/d will be destined to a thermal power station with a capacity of 150 megawatt (MW). It is expected to be found out in this region new reserves of about 30 billion m3 that would permit a production of 6 million m3/d of natural gas.

The present institutional and legal situation of the country allows Petrobrás to associate itself with private investors in order to apply new resources for exploring the Espirito Santo Basin, which is a concession area of this enterprise, whose geology is acknowledged promising.

In the south of the state, these partnerships have also been established. In our submarine coast, in deep waters, it is expected to be found significant reserves of oil and gas, based on positive seismic analysis, in a geologic prospect that is the continuation of the Campos Basin, which is the largest Brazilian petroleum area.


Also in the energy field, Petrobras and Cia. Vale do Rio Doce (CVRD) have been negotiating since 1996 the transport of about 5 million m3/d of natural gas through the Cabiúnas (RJ) – Vitória gas pipeline. Anchored at some of CVRD’s projects, specially the construction of another thermoelectric power station in neighborhood of Vitória, with a capacity of 500MW, the pipeline is part of the federal program "Brazil in Action". This demonstrates the governmental priority, even though the program may be financed by private resources without depending on government’s budget adjustments. With the construction of this pipeline, Espirito Santo will be interconnected to the southeast/center-west network of the country and to the South American cone.

With the construction of the thermoelectric power plants, projects that may be delayed but that are irreversible, about 650 MW will be added to the present 200 MW. Today we import about 80% of our electric energy needs; with these thermoelectric power plants our autonomy will be significantly increased.


A second potential stems from the implantation of the hot strip mill of the Cia. Siderúrgica de Tubarão (CST), made viable by the new controlling group of the company. This investment opens numberless possibilities for the use of steel sheets by all sorts of metal-mechanics industries. The kind of industry, with support from civil construction may give new impetus to the economy, in segments important for the creation of new jobs.

The CST has been developing an excellent job in what concerns the promotion of its products, including the creation of an excellence nucleus in metallic structures at the Federal University of Espirito Santo.


In the development of the metallurgical sector in Espirito Santo it should be highlighted the resuming of the operation of the former Companhia Ferro e Aço de Vitória - COFAVI, now under the command of Belgo Mineira, both for the production of steel pegs and the lamination of products used in civil construction and in mechanical industry, placing again our state in the list of producers of best quality steel. This unit started to consume 40 thousand m3/d of natural gas using the gas pipeline surrounding Vitória.

One agreement that congregates CDMEC, SINDICON, BANDES and SEBRAE, as an initiative for increasing the participation of Espirito Santo in large investments, is an example for exploring these opportunities.

Besides the two mentioned areas, other projects that are being negotiated should be mentioned and they may give more consistency to the optimistic panorama. They are the north and south coast railway, the expansion of our docks complex, tourism increment, incentive to the development of the forest-industry chain in forestry and the possibility of a chemical gas pole in Aracruz, among others. The incorporation of the northern part of Espirito Santo to SUDENE’s system and the already existing state fiscal incentives may also compose this panorama.

The continuing articulation of the institutions conducting these projects, already in course, with the constant preoccupation of maximizing and optimizing the economical and social benefits of these undertakings for the governments and its population should constitute the priority of our governing men. The aim is to increase the local participation in these investments, a larger utilization of what shall be produced here and the desirable added value to this production


The author is an economist from ADERES - Development Agency in Network of Espirito Santo and Executive Secretary of the State Energy Chamber.