Brazil power failures may trigger fiscal short circuit
By Alonso Soto
BRASILIA Feb 7 (Reuters) - Brazil's fiscal accounts, already under close scrutiny by rating agencies, could suffer a new blow this year as the government picks up the bill for rising energy prices.
A blackout in large swathes of the country this week raised serious questions about the capacity of the power system to cope with rising consumption and a drop in supply as low water reservoir levels sap output at hydroelectric plants.
To avoid an embarrassment during the upcoming soccer World Cup and a new spike in inflation, President Dilma Rousseff has vowed to take on the cost of using gas-and-fuel-powered plants to guarantee supply.
Finance Minister Guido Mantega acknowledged on Wednesday the government may have to use more than the 9 billion reais ($3.78 billion) it budgeted to pay for energy costs this year. Most of that amount would be loaned to power distributors to pay for more expensive thermal energy.
Local media has reported that the energy bill could balloon to about 18 billion reais this year, nearly double what the government paid last year.
The finance ministry declined to comment on the matter. Officials have said the government continues to calculate that figure, which will largely depend on whether it rains again soon.
That extra expense could not come at a worse time for the Rousseff administration.
Her government is scrambling to appease rating agencies threatening to downgrade Brazil's debt rating over fears that she is abandoning the prudent fiscal policies that helped the economy stabilize in the last decade. Continuación...