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Brazilian minister says no risk of energy crisis

Source: Thomson Reuters Foundation - Tue, 15 Jan 2013 20:16 GMT
Author: Reuters
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* Providential rains dispel danger of electricity rationing * Lobao says reservoirs filling, crunch was temporary * Thermal power plants will backup grid through April, May

By Anthony Boadle BRASILIA, Jan 15 (Reuters) - Summer rains falling across Brazil have dispelled any danger of power rationing in the world's sixth largest economy, Energy Minister Edison Lobao said on Tuesday, insisting that the government sees no need to increase emergency natural gas imports to keep thermoelectric plants running.

"Not a single light bulb has gone out because of the energy situation," Lobao said. "This was just a temporary seasonal situation and we can guarantee there will be no shortages of energy in Brazil."

In an interview, Lobao dismissed recent concerns that Brazil could have to return to the sort of energy rationing that crippled Latin America's biggest country as recently as early last decade. "That is a thing of the past," he said.

A dry, hot summer and the worst drought in a decade in Brazil's northeast drained reservoirs to critical levels at hydroelectric dams, Brazil's main source of power. To keep factories, lights and air conditioners running across the country, Brazil turned to back-up thermal power plants.

But abundant rainfall in the last few days in the center of the country, the source of many of the rivers that drive hydroelectric plants, have begun to fill the reservoirs. Even so, Lobao said Brazil will have to rely on its more costly gas-fired thermal power units running at full steam through April or May to satisfy the needs of the national grid.

"If it rains plentifully they will be disconnected," he said. The minister denied market reports that Brazil has increased imports of liquefied natural gas (LNG) by state-run oil company Petrobras and he ruled out gas rationing feared by many Brazilian industries.

"There will be no shortages of gas for the thermo-electric plants or for industries," Lobao said. "For the time being, it is not necessary to increase imports."

Petrobras produces increasing amounts of natural gas that cover half of Brazil's gas needs, but the other half is imported, with 30 million cubic meters coming by pipe from Bolivia and 15 million cubic meters of LNG arriving by ship.

At present, the government plans to restart a gas-fired 630 MW plant in Uruguaiana, on the border with Argentina, at the end of the month. To supply the plant, which has been shut since 2009 when Argentine gas supplies were stopped, LNG bought by Petrobras will be shipped to Bahia Blanca in Argentina, regasified and sent up to Uruguaiana by the existing pipeline.

The plan could change, though, if the hydroelectric reservoirs rise quickly. "If it continues to rain, the plant may not be needed and will be disconnected," Lobao said.

BLACKOUT FEAR DIMS

Reservoirs that drive hydroelectric plants in the drought-stricken Northeast of Brazil have recovered slightly. Water levels started rising last week in other regions of Brazil, but in the Northeast the first gains were only seen on Monday, with reservoirs up to 29.62 percent capacity from 29.33 percent, the national grid operator ONS said.

Reservoirs in Brazil's densely populated southeast, home to most of the country's industry, rose to 30.43 percent capacity. Energy generated by thermoelectric plants in Brazil was at 11,883 megawatts, according to the grid operator, accounting for slightly less of the country's existing power supply than had been expected.

Brazil has diversified its energy matrix in recent years but still depends on hydropower for 67 percent of its electricity. With oil and ethanol output falling, the recent electricity scare has darkened its energy outlook.

Lobao said there was no reason to fear new energy shortages. Brazil will expand electrical generating power by 8,500 MW this year (6,000 MW of hydro power and 2,500 MW of thermal power). Lobao said Brazil will add another 40,000 MW in coming years, including the controversial Belo Monte dam, to be the world's third-largest, in the Amazon basin.

Brazil has long boasted one of the world's cleanest energy grids, but the recent electricity crunch raised concerns among environmentalists that it will burn more carbon-intensive fossil fuels. Brazil has increased thermal power to 18 percent of its generating capacity and in the current drought its grid came to rely on thermoelectricity for a quarter of its power supplies.

Electricity rationing, still an uncomfortable memory for Brazilians, could have embarrassed President Dilma Rousseff, a former energy minister who vowed to end blackouts for good. It could also have dented her wide popularity as an able administrator.

One sure sign that fears of an energy crisis have subsided is the big drop in electricity prices on the spot market this week to an average 341.7 reais per MWh, down from 555 reais last week.

(Additional reporting by Anna Flavia Rochas and Caroline Stauffer; editing by Sofina Mirza-Reid)

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