(Adds comments on contracts)
BERLIN, June 2 (Reuters) - The impact of Brazil’s protracted drought on EDP-Energias de Portugal’s hydropower installations there could cut the utility’s full-year core earnings by between 150 and 200 million euros ($165-$219 million), its chief executive said.
“Hopefully it will be less than that, the lower end of that range, or even below,” Antonio Mexia told Reuters on the sidelines of the Eurelectric utilities industry conference.
Brazil, already hit by the severe drought last year, accounted for 17 percent of EDP’s core earnings before interest, tax, depreciation and amortisation (EBITDA).
Mexia said much would depend on whether Brazil decided on water rationing or not, and that the company was taking measures to limit the impact.
“The next three months will be crucial. We are taking measures to compensate for the drought,” he said.
Mexia said that under the firm’s contracts in Brazil, if a hydro plant does not have the amount of power it has committed to deliver, it needs to buy that power on the market, which can be up to double the contract price at times.
EDP’s reservoirs in Brazil are now slightly above 30 percent and Mexia estimated that at the end of the dry season the level should be at least around 20 percent to avoid problems.
He said the government and the regulator had done a lot to limit water consumption through a new tariff system, which would make the system more sustainable.
$1 = 0.9117 euros Reporting by Geert De Clercq; Editing by Mark Potter