Focus on Brazil

Brazil hit by new blackout, infrastructure in spotlight

A massive blackout left as many as 53 million Brazilians in the dark late Thursday and early Friday, the latest in a string of energy shortages that have raised questions about whether Brazil's infrastructure is keeping pace with economic growth.

News Daily,

26 October, 2012

Officials said a fire in a substation in the Amazon knocked out the whole electricity grid of northeastern Brazil in the region's worst blackout since 2001. The outage lasted up to four hours in some places.

In the city of Recife residents left without air conditioning and ventilators complained they could not sleep due to the heat and mosquitoes.

"There was a total collapse of the northeastern grid," acting Energy Minister Marcio Zimmermann said.

The government has not yet established the causes of a series of recent blackouts that have undermined confidence in Brazil's electrical system, Zimmermann said. He called the second emergency meeting in five weeks to discuss the problem.

The power shortages have added to concerns that the South American country will not be ready to host two major global sports events, the World Cup soccer tournament in 2014 and the 2016 Olympic Games.

The power outage, which affected 11 Brazilian states in the northern regions of the country, follows two other blackouts in as many months that affected millions of customers across the nation.

"We are taking all the corrective and preventative measures ... to minimize this type of occurrence, which is dramatic for all of us and principally for consumers," Hermes Chipp, head of Brazil's National Electric System Operator, told the Globo television network.

Brazil went through a so-called "blackout crisis" in 2001 and 2002 as a drought limited the output of hydroelectric dams. In response, the government forced electricity cuts in certain regions for hours at a time, severely crimping economic growth.

While Brazil has invested heavily in electricity generation since then, it still has a long way to go, with the country planning to build as many as 48 new hydroelectric plants by 2020 to keep up with the energy demands of rapid economic growth.

Energy policy has been at the forefront of government efforts to boost sluggish growth in Latin America's largest economy. Last month President Dilma Rousseff announced a major cut in electricity taxes in a bid to help boost industry and address the so-called "Brazil cost" - the mix of taxes, high interest rates, labor costs, infrastructure bottlenecks, and other issues that have caused the economy to become less competitive.

But critics say lowering energy costs for consumers could discourage private investment needed to increase Brazil's generating capacity. They say electricity companies have not invested enough in generation and transmission lines since they were privatized over a decade ago.

Brazil’s Petrobras Posts Surprise Profit Decline on Costs

Bloomberg,

27 October, 2012

Petroleo Brasileiro SA (PETR4), the world’s biggest oil producer in deep waters, said third-quarter profit fell 12 percent, missing analysts’ forecasts, after fuel imports pushed up costs and crude output slipped.

Net income declined to 5.57 billion reais ($2.7 billion), or 43 centavos a share, from 6.34 billion reais, or 49 centavos, a year earlier, the Rio de Janeiro-based company said today in a statement. Per-share profit excluding some items trailed the 58- centavo average of seven analysts’ estimates compiled by Bloomberg.

Fuel imports are curbing profit as imported gasoline and diesel prices exceeded those in Brazil. In the quarter imported gasoline cost about 10 percent more than domestic fuel because the government, which control’s Petrobras’ board, fixed prices to rein in inflation, said Lucas Brendler, who helps manage about 6 billion reais at Banco Geracao Futuro de Investimentos.

“You are still importing at a price much higher than you are selling in the downstream,” Brendler said in a telephone interview from Porto Alegre, Brazil, before the report was released. “They have to solve this problem.”....

http://www.bloomberg.com/news/2012-10-26/petrobras-quarterly-profit-misses-analysts-estimates-on-costs.html