Panicked by the arrival of what is usually the country’s driest month, and less-than-hoped-for energy savings, the Brazilian government is offering incentives to consumers curbing their energy use by more than the required 20%, Brazilian media has reported. The announcement follows more than three months of government-enforced electricity consumption reductions by all domestic and industrial consumers, in an attempt to ward off California-style rolling blackouts (see related story), which have resulted in businesses having to cut their working hours and facing large fines for non-compliance.

Brazil is still in the grips of its energy crisis caused by an over-reliance on hydropower, which accounts for almost 95% of supplies. Several years of below-average rainfall in the most populous parts of the country have left reservoirs 70% depleted, and in the wetter regions of the Amazon Basin there is no infrastructure to enable power to be transferred nationally. Under-investment in the power sector is also to blame – although demand for electricity grew by 55% from 1990 to 1999, installed generation capacity only increased by about 25% over the same period.

Although reductions of 20% in electricity use, which is the amount the Government said is necessary in order to avoid blackouts, were achieved in July, August saw the most populous parts of the country miss its targets, and the Government is now very concerned about prospects in September, a hotter and drier month. As a result, President Fernando Henrique Cardoso has announced that any consumers using less than 225 Kilowatts/hour (KWh) monthly, who manage to cut their electricity consumption by more than 20%, will receive credits to the value of current use.

In a television address to the nation, President Cardoso warned that if insufficient numbers failed to take up this offer, then blackouts could affect almost all 170 million Brazilians from October. The Government is also urgently embarking on investing in new power capacity, such as the construction of 49 new thermal power plants and the earmarking of US$ 125 million for sugar mills that generate surplus electricity by burning sugar cane waste. Until now, prohibitive capital costs have deterred significant sugar-fired generation from the nation’s 350 mills that are mostly self-sufficient in terms of electricity and have potential capacity of between 400 and 700 mega watts. Brazil has also recently begun transferring electricity from Venezuela via thousands of kilometres of cables, which have been criticised for damaging one of South America’s most remote and beautiful areas, home to indigenous tribes.

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