THE YEAR AFTER
... or the need of an Energy Mobilization Plan to guard against the risk of a new crisis in 2002

e&e proposal
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1 – INTRODUCTION

The start of the next rainy season shall find the hydroelectric power plant’s reservoirs in their lowest historical level. Obligatorily, we will start the year 2002  with a larger risk of supply shortage than that of  the beginning of 2001.

When “the waters of March close the summer” of 2002 we will have an idea of what that year really holds in store. No one should be surprised at that time with the news concerning the need of a new rationing.

In other words, from the Country’s point of view, the measures taken to solve the present crisis must be extended at least until the end of next year, since it will be necessary to create conditions to compensate for the low level of the reservoirs at the start of next year. With anticipation of corrective measures and provided that the rains do not fail again, it is almost certain that the hypothesis of a new rationing can be prevented.

The present energy supply crisis has precedents in the Country, both in the Electrical Sector (Admiral Magaldi in the sixties) and in the petroleum area, when the price increase of this product together with exchange difficulties lead to contingent consumption and substitution programs (start of the eighties).

The measures to face the crisis must have in its coordination the participation of the sectors responsible for consumption such as Industry and Commerce as well as the technological area since conservation and substitution involve a strong technological component.

At the time of the second petroleum crisis, the Government, through the Planning Ministry and with strong support from the technological area (STI/MIC), coordinated an Energy Mobilization Plan, supported by the World Bank, whose objective was to propose energy policy measures that would result in a significant contribution for deficit reduction in the payment balance.

2 – SPECIAL NATURE OF THE CONTINGENCY MEASURES

The contingency measures in the present crisis, as in the previous ones, have a particular nature since they implies in admitting the adoption of economic measures of extraordinary type that would not be admitted in normal circumstances. It is necessary the evaluation of the real impact of these measures so that, once the circumstances that determined them are gone, they won’t become a permanent encumbrance for the Brazilian economy.

It is also necessary to consider that in the present economic situation of the Country there is not only a forced limitation on electrical supply but also limitations in the balance of payments and a rigorous limitation in public investments.

3 – CONTINGENCY OR ENERGY MOBILIZATION PLAN

We are suggesting that the measures proposed for mitigating the crisis in the next months, most of them of restrictive character, should be accompanied by positive measures so that the hypothesis of a new crisis next year is discarded. These measures would constitute a Contingency (or Mobilization) Plan and should have as objective the better application of existing resources.

The idea of mobilization is opposed to that of stagnation, suggested by the crisis and announces a series of activities that have the possibility of compensating those that are eventually suppressed. An investment period should be foreseen, which will generate present and future activities. (Proálcool, Conserve and other programs of the petroleum crisis time had this effect and generated in the population this positive expectancy).

In order to reach this objective it is recommended that each one of the proposed measures should be accompanied by the evaluation of its economic impact, direct or indirect.

The proposed contingency measures should explain the means, objectives and period involved. The proposals should give to the authorities a panorama of the external and internal repercussions of these measures on the internal economy, on the balance of payments, on employment, on tax collection and on the public debt. Political and legal measures that can make the proposed solutions viable should be suggested. In the case of subsidies and special credit concessions, credit rearrangement, taxes alterations, the impacts of those measures on the economy should be evaluated. The supposed source of resources should also be clearly indicated. It would also be convenient to evaluated the additional tax collection induced by each measure, direct ( taxes on products and equipment) and indirect (taxes on additional salaries paid).

The institutional mechanisms to be activated should be determined, and it is desirable to suggest explicitly the  regulations, administrative rules or appropriations, with identification of the organs responsible regarding each one of these actions.

Naturally, a complete analysis of each measure would be impossible in the short term available before the decision to execute the plan. However, it is estimated that it is a better .tactic to roughly evaluate these impacts using generic coefficients than not evaluating them at all.

As a positive point in the present situation, it should be pointed out that available tools and studies under development as those referring to the energy matrix, the existence of a input versus product matrix, reasonably updated and of instruments as the planning and management organs implanted by the Government facilitate this task.

On the other hand, in the present energy reality there is an extremely positive point, namely, the availability of natural gas, that can satisfy the needs of electricity substitution.

Mobilize human, physical and financial resources to overcome the crisis seems to be the answer that the Country expects from the Government and from Society. Our hope is that we can give a positive answer to the crisis and direct our efforts no to palliative measures but to solutions that will lead again to growth.