Economy & Energy
Year III - No 14 May/June 1999
New Petroleum Era
Brazilian Energy Sector 1998/1999
Following the Brazilian Economy:
Brazilian Public Debt
Thursday, 10 July 2003.
|The The Brazilian Energy Sector
Production: Coordenação Geral
de Informações Energéticas
Secretaria de Energia
Ministério de Minas e Energia (*)
Contacts: João Antônio Moreira Patusco
English Version: Frida Eidelman
- General Considerations
The Energy Internal Offer - EIO of the country reached 248 million tons oil equivalent
(toe) in 1998, a growth of 2.2 % relative to 1997. Of this amount, approximately 57% are
clean and renewable energy, namely 38% hydroelectricity and 19% biomass. With large
territorial extension and large energy potential, the country opted for the establishment
of policies that favor renewable energies; the examples are the development of
hydroelectricity from 1950 on and the alcohol program in the seventies. Of the 43% of IEO
referring to non-renewable energy, 35% correspond to petroleum and its products and the
remaining 8%, to natural gas, mineral coal and uranium.
In the petroleum area, PETROBRAS - Petróleo Brasileiro SA has been successful in the
exploration and production of petroleum since the beginning of the eighties,
the regular and reliable supply of petroleum products and reducing significantly the
external dependence on these energy products, presently around 43%. At the time of the
second petroleum shock in 1979, this dependence was around 85%. In global terms,
considering the offer of all forms of energy, the external dependence of the country is
In 1998, the Government proceeded with its program for stimulating the increase of
natural gas in the energy market and promoting a larger use of non-conventional and/or
decentralized energy sources (solar, wind, agricultural and forest residues, vegetal oils
and small hydraulic potentials). The use of solar energy was encouraged, mainly for
supplying to isolated and unassisted communities and for the development of the rural
area. The incentive programs for increasing the energy efficiency level of the country,
comprising the production and efficient use of energy and cogeneration of electrical and
thermal energy were also strongly stimulated and will influence the national energy matrix
in the long term.
In the institutional area, the Ministry of Mines and Energy continued the actions for
reformulating the energy sector, opening opportunities for the participation of the
private sector in the necessary investments and the responsibility for
national supply. In this transition phase and in spite of the elevated growth rate of
energy demand, the country succeeded in overcoming localized difficulties and avoiding
supply limitations and service deterioration. The actions of the new regulation agencies -
ANEEL - National Agency of Electrical Energy and ANP - Petroleum National Agency is
fundamental for continuing the guarantee of supply and the increase of energy service
quality in the whole country.
The National Council of Energy Policies - CNPE, established in 1997, chaired by the
Ministry of Mines and Energy, will promote studies and will examine policy propositions in
the supply and use of energy before taking them for presidential approval.
2. Economic Growth and Energy Consumption
In the period between 1970 and 1980, the Brazilian Gross National Product increased
at an average rate of 8,7% annually (aa) and the energy consumption increased as well,
with significant annual rates, electicity 12.4% aa and petroleum products 8.3%
determining factors for these results were: the continental dimensions of the country, the
predominance of road transport and also the development of basic industry and
infrastructure to meet the unprovided needs of many regions of the country. In spite of
the elevated rates of electricity and petroleum products consumption, the Internal Energy
Offer-IEO grew 6.6% aa - elasticity of 0.75 relative to the GNP - mainly due to the small
growth of biomass (0.4% aa), constantly substituted by petroleum products (LPG and fuel
From 1980 on, under the pressure of the recessive environment of the country's economy,
these rates declined and varied considerably. In the period between 1980 and 1992, the
country's economy grew at an average rate of only .3% aa, with rates varying between (-)
4.3% in 1980 and (+) 7.8% in 1985. The growth rates of energy demand declined too but not
in the same proportion as those of the GNP. The IEO grew 2.8% aa, with elasticity of 2.1
relative to the GNP. The electricity consumption grew 5.4% aa, due mainly to the
expansion of the electricity-intensive industries (aluminum, pig iron, etc.). As to the
petroleum products consumption, on account for the substitution policy, it grew only 0.9%
aa and the biomass consumption, 1.1%, this last one higher than that verified in the
period 70/80, mainly because of the alcohol program.
In the last years, with the stabilization of the economy, a new development cycle was
established and this increased the expansion rate of the economy and of energy
consumption. In the period between 1992 and 1997, the GNP grew 4.1% aa and the IEO grew
4.3% aa. In the same period, the petroleum products showed average growth rate of 5.8%,
electricity 5.0% and biomass 0.6%, corresponding, respectively, to elasticity of 1.40,
1.21 and 0.14 relative to the GNP. The residential and commercial electricity, the
automotive gasoline and aviation kerosene were the large inductors of the high energy
consumption rates owing to the better income distribution caused by the Real plan.
In 1998, due to the crisis in the Asian countries, the Brazilian Government was
constrained to take measures that led to a strong retraction of the economical growth and
it is being expected a growth of around 0.1515% of the GNP. Nevertheless, the energy
sources above mentioned, associated with the population's well being, kept their high
consumption levels, as is the case of residential and commercial electricity with growth
superior to 7%, of automotive gasoline (5.2%), aviation kerosene (6.9%), Diesel (6.6%) and
consequently the IEO's elasticity relative to the GNP will rest above 7.
Therefore, it should be emphasized that in spite of the high rate of consumption growth
verified in the last years, the measures adopted by the Ministry of Mines and Energy have
permitted to maintain the supply at compatible levels as no short supply crisis has
3. Electrical Sector
From the fifties on, the Brazilian states established their own electrical utilities.
They progressively substituted the privates companies existing at that time. Later on, the
Federal Government created ELETROBRAS, in 1963. Since then, the installed capacity
of electricity generation grew dramatically reaching about 61.4 GW in December 1998,
including the auto-producers with about 3.9 GW and 6.3GW from the Paraguayan part of
Itaipu, almost completely intended for the Brazilian market.
In 1998 2.31GW were added to the installed capacity of electrical generation of which
2.16GW for public use and 0.15 GW from auto-producers. It should be emphasized the start
of operation of 1,290 MW from Serra da Mesa - Go, 390 MW from Miranda - MG and 162 MW from
Três Irmãos - SP, all of them hydraulic power plants.
At the end of 1998, the electrical internal generation for public use was divided
between State (92.7%, of which 14.5% referring to the Brazilian part of Itaipu) and
Private Sector (7.3%). Hydroelectricity represented 95% of the total national electricity
In the effort to ensure energy supply in the next years, the Ministry of Mines and
Energy made in 1998 a bidding contest for 7 new hydroelectric undertakings that totals
2,446 MW, representing private investments of about US$ 1.9 billion in the next years. New
authorization were granted as well, that totals approximately 1,700 MW aiming at
constructing thermoelectric power plants, most of them located in the southeast region,
between the states of Rio de Janeiro and São Paulo.
The internal public generation in 1998 was 301.2 TWh, to which should be added the
Paraguayan part of Itaipu (39.4 TWh) and that of auto-producers (1.2 TWh), permitting to
satisfy a total consumption of 287.4 TWh (4.1% higher than that of 1997). In December 31,
1998 about 60% of the electrical energy distribution was under private control as compared
to 31% in December 1997, which demonstrates a significant transfer of responsibilities of
service provision to the private sector.
The transmission of the generated energy to the consuming market has basically been
made through two linked systems. One integrating the north and northeast, with 500kV
lines, connecting the hydroelectric Tucurui power plant to the Rio São Francisco's power
plants and the other one integrating the south, southeast and center-west regions, with
lines from 345/440/500 to up to 750 kV, besides the direct current links with 600 kV.
In 1998 3,805 new transmission lines - TL were added to the Electrical System. It
should be mentioned the implementation of the north-south TL composed of the alternating
current of 500 kV with about 1,280 km between Imperatriz in Maranhão and Samambaia in
Brasilia, which connected the north/northeast and south/southeast systems rendering them
into a single linked system.
Most of the Brazilian municipalities have today a regular and reliable electricity
service. Nevertheless, in spite of the fact that more than 90% of the total residences
have electricity, part of the extended Brazilian territory is not covered by the
transmission net. The north region presents the largest provision problems of the country,
where localities are supplied by isolated systems of thermal generation from inefficient
diesel oil power plants. This opens a large market for private investors interested in the
segment of small or medium size plants, specially projects that use decentralized sources
(for example, photovoltaic, wind, biomass and small hydraulic developments). It should be
added that natural gas from Urucu will permit expanding the electricity offer in the north
region in a more economical and competitive way, increasing the participation
possibilities for private investors.
In this sense, the Federal Constitution was amended in 1995, eliminating restrictions
to foreign private investors' capital in the energy sector. The Laws 8987 and 9074/95 (new
Concession Laws) introduced deep and important alterations, specially concerning: (i)
bidding contest for new generation undertakings; (ii) creation of the Independent Energy
Producer entity; (iii) free access to transmission and distribution systems; and (iv)
freedom of choice for the large consumers to choose the energy suppliers. The Decree 1717
established the conditions for extending and regrouping the public service concessions and
the approval of Conclusion Plans for suspended works. Decree 2003 of 09/10/96 regulated
the conditions for independent and auto-producers. Also in 1996 the National Electric
Energy Agency - ANEEL was established by the Law no 9427 of December 26. Other
regulations were established in 1997, specially: (i) Law no 9433 of January 08 that
established the National Policy for Hydraulic Resources and established the National
System for the Management of Hydraulic Resources; (ii) Decree no 2335 that
established ANEEL and approved its Regimental Structure; and (iii) Special Law DNAEE no
466 that consolidated the General Conditions for Supplying Electrical Energy, harmonizing
it with the Consumer's Defense Law (Law no 8087 of 09/11/90).
In 1998 new regulations were established aiming at improving the legal structure of the
electrical sector, among them: (i) Law no 9,648 that created the Energy Wholesale Market -
MAE and the National System operator - NOS entity that will create a favorable environment
for free trade of electrical energy. Additionally, this law altered legal provisions
allowing among other things: (a) ANAEEL should be vigilant in what concerns the compliance
with competition's defense legislation; (b) increasing to 30 MW the limit for the
authorization of hydroelectric power plants; (c) defining for the first time the import,
export and commercialization activities of electrical energy, depending on authorization
to be granted by ANEEL; (d) definition of the splitting of the federal generation
electrical utilities; (ii) ANEEL Resolution no 094 that defines the
concentration limits in the electrical sector for the distribution and generation
ANEEL, whose Board was installed at the end of 1997, started its activities with the
necessary requirements concerning administrative and financial autonomy and skilful to
carry out its task. It was an important and necessary institutional change aiming at
assuring the harmonious development of the Brazilian electrical sector.
In 1998 ANEEL implemented a vigorous inspection program where all the concessionaires
have been inspected in what concerns the economical/financial aspects, supply quality and
generation technical standards. A process of decentralization of several activities of all
created state agencies was also started. Actions concerning consumer's defense,
strengthening of consumer's committees, conflict settlement and public hearings, had
strategic importance during the year, due to the Agency's commitment to the Brazilian
In 1998 the privatization process of the electric energy concessionaires was carried on
and about 60% of the Brazilian distribution market has already been cumulatively
transferred to the private sector, totaling resources around US$ 27,7 billion dollars, in
which the transfer of about US$ 6.0 billion dollars of debt is included.
PRIVATIZATION CARRIED OUT IN THE ELECTRICAL SECTOR
As of 02/28/99
% Ordinary Shares
in R$ millions
|Subtotal - Electrical Energy
- Petroleum Sector
The petroleum and gas industry, after decades of state monopoly exercised by PETROBRAS,
enters a new era. The Constitutional Amendment no 9 of 1995 extinguished the
monopoly of the industry's basic activities and the Law no 9478/97 disciplined
the opening to the direct participation of the private sector in all links of the
The complement of the new institutional framework was introduced by the installation of
the National Petroleum Agency - ANP in 1998 with large regulation, contracting and
inspection responsibilities in the petroleum and natural gas sector.
In less than one year the ANP has been strongly acting in the petroleum sector,
inspecting the distribution segment, making the registration and inspection of
installations, establishing collaborations with universities and other research
institutions. It has also elaborated the petroleum import regulation as well as that of
free access to natural gas transport installation and granted the inherent authorization;
it materialized the concession contracts for PETROBRAS' areas and submitted to public
evaluation the model of new concession contracts to be adopted and it has recently
authorized the construction of a new refinery in the country and it is preparing bidding
contest for new parts in areas that are not assigned to PETROBRAS.
The implementation by ANP of the policy of price liberation for the final consumer
reached, in 1998, 98% of the gasoline and alcohol market, 85% of the aviation kerosene
market and 80% of the LPG market. In what regards the competition in commercialization
margins of the distribution companies, it has reached the whole market. In the period,
most part of the fuel transfer freight costs has been incorporated in the price of
products, reducing several subsides and price distortions.
For PETROBRAS, 1998 was a milestone in the evolution of its petroleum and natural gas
exploration and production activities. As a consequence of the approval of the Law no
9478/97 that regulates the petroleum sector in Brazil, the company presented to the
Minister of Mines and Energy in October 1997 the list of 206 areas containing 240 fields
with effective production and requested for permission to carry on the exploration
activities in 133 areas (blocks) and 52 areas comprising 60 fields of production
In July 3, 1998 ANP defined the areas that would remain with PETROBRAS and the
concession contracts were signed in August 6, 1998. The company obtained 397 concessions
in Brazilian territory, divided in exploration, production development and production
field blocks, whose values and respective areas are presented in Table 1. The total area
of 458,532 square kilometers represents 7.1% of the Brazilian sedimentary area.
Blocks/ Concession Fields
The exploration success index for pioneering wells reached 31% on land and 25%
The oil and condensed products reserves in the country increased to 7.4 billion bbl and
the total reserves to 14.4 billion bbl, corresponding to 4.2% and 1.4% respectively. It
should be mentioned that PETROBRAS incorporated in its process of reserve evaluation
procedures, criteria from the Society of Petroleum Engineers (SPE) and of the World
Petroleum Congress (WPC).
The projects in operation permitted the petroleum domestic production (including schist
oil) and natural gas liquids (NGL) to reach the average of 1,004 281 bbl daily, 15.5%
higher than the average production in 1997. This increase is due to the start of
production in the 26, 27 and 30 PETROBRAS platforms in the fields of Marlin, Voador and
Albacora, respectively, as well as the improvement in the operational performance of the
company. The offshore production corresponded to 77,4% of the total, originating from 72
platforms of fixed production and 20 floating ones while at the end of the year about 50%
of the total production originated from systems located in deep waters above 400 meters.
In December 31, 1998 a new record was established in the petroleum domestic production
when the mark of 1,222,228 bbl per day has been overpassed. This result was mainly a
consequence of the start of operation of the 33 PETROBRAS platforms in the Marlin field.
In the commercialization segment, PETROBRAS imported 163 million bbl (447 thousand bpd)
of petroleum and 150 million bbl (411 thousand bpd) of petroleum products in order to
complement the internal market needs, with larger participation of LPG and light and
medium distillates, spending a total of US$ 1.9 billion FOB - Free On Board -, with
petroleum and US$ 2.1 billion FOB with petroleum products.. The exports were 42 million
bbl, with takings of US$ 541 million FOB, with larger shares of maritime fuels, light
distillates and heavy products.
National consumption of petroleum products in 1998 reached 100.9 million cubic meters
(equivalent to 1.74 million bpd). This represents an increase of 3.7% relative to the
previous year when there was a rise of almost 8% in the demand. This smaller increase rate
in demand had the influence of the country's economical and financial difficulties during
the second semester that limited the expansion of the economical activity.
In 1998 PETROBRAS' refineries reached 64.2% of national petroleum participation in the
processed load. In this sense, two special moments have marked the year: in June the
conclusion of the expansion project of the Getúlio Vargas Refinery in Paraná, made
possible the installed nominal refining capacity of this unit to reach 1,834 thousand bpd;
in October, the average monthly load had a record of 1,621 thousand bpd. Besides that, it
is important to accentuate the production of petroleum products which reached the yearly
average of 1,488 thousand bpd.
In the transport segment, the pipelines in operation were 12,074 kilometers at the end
of 1998, of which 7,830 km of oil and other products and 4,244 km of gas pipelines. It
should be stressed the start of operation of the URUCU/Coari oil pipeline and of the
Solimões Terminal, built in the Amazon forest to drain the petroleum and LPG production
from the Urucu petroliferous province.
The partnership process in transport activities proceeded with the studies concerning
the construction and operation of new pipelines for petroleum products in the south,
southeast and center-west regions of the countries.
5. Natural Gas Sector
In 1998 intensive work was carried on in order to guarantee the increase of natural gas
internal offer and to continue and conclude the new transport pipelines, namely the
Bolivia-Brazil pipeline - the largest undertaking of this kind in Latin America -, the
Urucu -Coari pipelines in the Amazon and the Guamaré-Pecem and Pilar-Cabo gas pipeline in
the northeast region.
Still in 1998, the construction of the north segment of the Bolivia-Brazil pipeline
between Santa Cruz de la Sierra in Bolivia and Campinas, in São Paulo, 1,970 km long, was
concluded. From 1999 on, when this segment will be operating, there will be initially
available an average volume of 4.1 million cubic meters per day of natural gas for the
sates of Mato Grosso do Sul and São Paulo.
The conclusion of the south segment between Campinas, in São Paulo and Porto Alegre,
in Rio Grande do Sul, with 1,180 km of extension, is foreseen for the end of 1999, when
Bolivian gas will reach the states of Paraná, Santa Catarina and Rio Grande do Sul,
supplying the country with an initial volume of 9.1 million cubic meters/day.
The pipeline will be operated by the Transportadora Brasileira Gasoduto Bolívia-Brasil
(TBG), controlled by Gaspetro (99,98% of the shares).
Another large project administered by Gaspetro is the natural gas from Urucu for
thermoelectric generation that will generate 930 MW in the Amazon region, using five
million cubic meters /day of natural gas, coming from the Urucu and Juruá fields in the
Solimões Basin, in the High Amazon. In 1998 the construction of the 280-km-long
connecting Urucu to Coari, at the banks of the Solimões River, was
concluded. Besides that, it is foreseen the construction of a gas pipeline connecting
Coari to Manaus with 420 km of extension and a 500 km-long gas pipeline from Urucu to
Porto Velho in order to supply fuel to the already existing thermoelectric power plants
and those to be installed, which will supply to the Manaus' system and those of the
neighboring localities as well as the linked system of Rondônia e Acre.
In partnership with the private initiative, as part of the project of importing natural
gas from Argentina, it will be built the Uruguaiana-Porto Cheers gas pipeline with 615
kilometers of extension and capacity to transport up to 12 million cubic meters /day of
natural gas. The pipeline will enter in operation at the end of the year 2000 and it will
be linked to the Bolívia-Brasil gas pipeline in the vicinities of Porto Alegre.
In 31/12/1998, the total reserves of natural gas reached 409,8 billion cubic meters,
while the proved reserves reached 225,9 billion cubic meters, equivalent to 21 years of
average annual production. The production of natural gas was of 29,7 million cubic meters
a day, superior in 9,8% to the average of production of 1997. The offshore production of
gas corresponded to 65% of the total production, representing a similar percentage as that
of the previous year.
6. Mineral Coal Sector
The mineral coal industry in the country began its activities about 140
years ago. The
characteristics of the Brazilian coal, with low calorific power, much ash and high sulfur
content, demand processing that raises its cost and makes it not very competitive
vis-à-vis other energy sources. These limitations lose their importance when new
technologies are introduced, more appropriate for direct burning, eliminating the
processing used in the past when the coal used in the thermal generation was subsidiary of
metallurgical coal production.
Until 1975, the mineral coal participated with 3,2% in the national energy matrix,
mainly for metallurgical use (about 80% of the total). From 1975 on, its use in the
industry grew as a function of the advantageous prices compared with those of fuel oil as
well as of the subsidies to its transport, decreasing afterwards from 1986 on, when
petroleum prices decreased.
Now, the participation of the mineral coal in the Brazilian energy matrix is 5,0%, of
which, 0,8% national coal and 4,2% of imported metallurgical coal and coke. In 1998, of
the 5,6 million tons produced in the country, 86% was consumed in thermal power plants and
14% in the industry.
In 1998, with an installed capacity of 1.415 MW of electric generation (public) using
mineral coal, 4630 GWh were generated (12% below that of 1997) and 3890 thousand tons of
coal were consumed. In the indicative planning of the electric sector, to the current
installed capacity of thermal power plants using mineral coal it should be added 1.200 MW
(two power plants of 350 and two of 250), until the year 2006.
To enlarge the current competition capacity of the national carboniferous sector,
efforts for capacitation and modernization of the industry were continued aiming at the
implantation of new technologies, such as clean coal technologies. In that sense,
cooperation agreements between the Ministry of Mines and Energy and the Department of
Energy of the United States are being established in order to build a new stage for the
industry, through: (i) reduction of the coal production and processing cost by using
modern technology, (ii) mitigation of the environmental impacts provoked by the industry,
(iii) amplification of the revenue in the generation with the introduction of the combined
cycle techniques and, (iv) development of specific programs for facilitating partnerships
among national and foreign companies.
7. Energy for Isolated
Communities and for Rural Areas
The MME's Program for Energy Development of States and Municipal districts - PRODEEM -
gave continuity to the actions aiming at supporting the supply of basic social demands of
dispersed communities in localities not served by the electric system, and to promote
income increase and creation of jobs in the rural areas, by installing local small energy
systems of production and use, using renewable and decentralized energy sources,
especially solar energy. In partnerships with other entities, the Program also promotes
the development of the education, health, water supply and communication services.
The surveys carried out by the states and concessionaires of energy electric point out
the existence of about 100 thousand unassisted communities and more than 3 million rural
properties without energy, representing about 20 million people unable to participate in
the process of social development and economic growth of the country.
Thus, as results of the Program, in the period 96-98 more than 2.000 communities have
been supplied with illumination of schools and community centers, water pumping, food
production, information, emergency communication and other collective benefits,
contemplating about 400 thousand people.
Still, in the period 1996/1998, PRODEEM consolidated the partnerships with several
institutions interested in the program and it devoted efforts to show the extraordinary
potential of the Brazilian market for the development of renewable energy and to raise the
interest of the private sector on the programs, especially on the production areas
(residences and rural units) and isolated systems.
As a consequence of PRODEEM's actions, the BIRD proposed to finance one project for
energizing 78.000 rural residences, in the value of US$ 110 million, and BID prepared,
together with DNDE, PRODEEM's Plan of Action, involving the contribution of up to US$ 9
million, for infrastructure investment, with the following objectives: (i) to increase the
supply capacity to 10/15 thousand communities a year; (ii) to promote the training and the
operational and managerial capacitation, in all the activity levels and in
the whole country;
(iii) to stimulate the formation of market of energy supply services in the rural way from
renewable decentralized sources (iv) to make possible the effective transfer of new
technologies, using the scale of the Brazilian market as vector of its competitive
application in the country; and (v) to implant a monitoring and evaluation system of the
results (social and economic impacts of the program), of furnishing information and of
dissemination of innovative and successful solutions.
Due to its national comprehensiveness and its structuring characteristic regarding
social and economic development, PRODEEM was included in the Program Brazil in Action,
starting from the administrative year of 1999 on.
in the Sector Energy
In the last years, with annual investments varying between 2.5 and 3.0 billion
dollars, the Brazilian Petroleum Sector has been able to guarantee the supply of petroleum
products and to increase significantly the oil and natural gas reserves.
In what regards the Electric Sector , the investments made in the last years, around
4.5 to 5.0 billion dollars a year, of which about half in the generation segment, has
not been enough to guarantee annual increments around 3.500 MW to the generation installed
capacity , the power necessary to supply the verified growth of demand. Thus, the average
increments of 1.080 MW a year, between 1990 and 1994 and of 2.000 MW from 1994 on, have
increased the risk of supply cut off.
In the future, some alterations should happen in the structure of energy investments.
With the installation of natural gas thermal power plants, that demand smaller investments
than the hydroelectric ones, it is expected a relative reduction in the generation
investments, with consequent increase of investments in gas pipelines. On the other side,
the electric connections with Argentina and that between the South and North of Brazil
will demand larger investments in the transmission segment.
In summary, the potential of energy supply investments for the next years can be
estimated as: 3,0 to 4,0 billion dollars in the petroleum area 1,0 in gas pipelines,
2,5 to 3,5 in electric generation and 2,5 to 3,0 in transmission and distribution sectors.
Therefore, a total amounts between 10 and 11 billion dollars a year will be necessary.
According to the Decennial Plan for the Electric Sector Expansion, the section of
foreseen projects may increase the generation installed capacity to 104,7 GW in the year
2008, representing an additional of 43,3 GW relative to 1998. In this section are included
21,5 GW - corresponding to 54 new undertakings and 4 installation conclusions - which, in
the practice, represent the minimum group of projects with which the Electric Section can
count on with reasonable assurance.
In this classification are included: (i) the works in phase of construction and
installation (11 GW), of which should be highlighting Porto Primavera hydraulic power
plant (1.814 MW), ITA (1.450 MW), I Salto Caxias (1.240 MW), Machadinho (1.140 MW),
Lajeado (850 MW) and Cana Brava (450 MW); and the Angra II (1.309 MW), Uruguaiana (600
MW), Cuiabá (330 MW) and Pecém (240 MW) thermal power plants, and, (ii) the projects
that already had their concession granted or authorized, but whose works were not started
yet (10,5 GW), with highlight for the hydroelectric power plant of Tucuruí (4.125 MW - 2nd
stage), Itaipu (1.400 MW - 19th and 20th units), Campos Novos
(880 MW), Itapebi (450 MW) and Aimorés (396 MW) and the Angra III (1.309 MW) and Jacuí
(350 MW) thermal power plants.
The remaining 21,8 GW of the projects section corresponds to undertakings to be bid or
authorized by ANEEL in the next years and should deserve the necessary follow up in what
regards the interest of the private sector
As to the transmission undertakings, 5 interconnection systems are under construction,
at the beginning of operational test or in advanced phase of negotiation, and they will
aggregate to the generation, energy equivalent to 2.270 MW at the end of the year 2000.
They are (i) North/Northeast System with that of the South/Southeast/Center-west - 1.000
MW - in phase of operational test; (ii) Brazil with Argentina - 1.000 MW - foreseen for
2000, (iii). Brazil with Venezuela - 200 MW - foreseen for 1999; and (iv) Brazil with
Uruguay - 70 MW - foreseen for 2000.
In what concerns the Privatization Program of the Electric Sector, the state
governments are carrying on privatization of distribution companies, such as: CEAL, from
Alagoas; CEPISA, from Piauí; ELETROACRE, from Acre; CERON, from Rondônia; CEMAR, from
Maranhão; SAELPA, from Paraíba; CELPE, from Pernambuco; CESP, from São Paulo and the
COPEL, from Paraná, and it is expected that, in near future, 70% of the Brazilian
electric energy market will be supplied by private concessionaires. In the ambit of MME
and BNDES are under way the studies for the transfer of the stock controls of the
subsidiaries of ELETROBRAS (FURNAS, with 7.842 MW - CHESF, with 10.705 MW; and
ELETRONORTE, with 5.703 MW).
Therefore, the main business opportunities of the Brazilian Electric Sector are
connected mainly with the offer of new generation undertakings for the private initiative
and the construction of transmission systems, as well as, the privatization of
distribution and generation systems assets. In this way, in 1999, ANEEL will issue 19
proclamations for hydroelectric undertakings (3.765 MW and US$ 4,8 billion of
investments), as well as begin proclamations release for exploration and transmission
It should be added the great business opportunities stemming from supplying the needs
of isolated communities and rural areas, in the ambit of PRODEEM, represented by the
installation of decentralized energy systems, using local sources of renewable energy, as
a complementation to the conventional rural electrification. In order to supply to all
rural properties that do not have the energy necessary for their productive development, it
is estimated that it will be necessary an investment of the order of US$ 20 billion.
In the Petroleum Sector, including the production and transport of natural gas, the new
regulation opens wide field for private investments, associated or not with
In this matter, to PETROBRÁS has been offering partnership in several projects, embracing
the exploration, production and provisioning segments (coke, underground, LPG storage,
thermoelectric generation, optic fibers, pipelines, paraffin, solvents, methanol, natural
gas, etc). The projects in study have been attracting the interest of several national and
international companies, and the company has already concluded the process of partner
selection in the area of electric energy:, to lead and implant the cogeneration units of
the Landulpho Alves Refinery (BA), with the consortium ABB Energy Ventures Inc.; the
Henrique Lages Refinery (SP), with the consortium Marubeni Corporation and Sithe Energies
Inc.; and the Paulínia Refinery (SP), with OPP Petroquímica, the Grupo Ultra and the
Centrais Electricas do Estado de São Paulo - CESP.
With the issuing of the Decree no. 2.705 (I Decree of the Governmental
Participation) and the signature of concession contracts referring to the areas destined
to PETROBRÁS, the company was qualified to enter into partnerships with companies with
which it had signed preliminary agreements. Those partnerships aggregate significant
results to the petroleum industry of the Country. They involve 32 exploration and
production projects, distributed in 14 sedimentary Brazilian basins, of which 04 were
already negotiated in its final form. So, about thirty companies will be shortly acting in
the new scenario as partners in those activities, opening the possibility of contributing
with global investments of the order of US$ 5,3 billion in the next three years. Seven
partnerships were already signed involving 14 different national and foreign companies
In the exploration area, besides partnerships with Petrobrás, the country disposes of
a sedimentary area evaluated in about 6,4 million km2, in the continent and
off-shore, most of it needing investments in exploratory campaigns for larger detail,
showing large potential to be develop in its up-stream.