Regional Studies

index

Chapter 6
The case of Brazil

The institutional structure of the Brazilian energy sector was traditionally characterized by the prevalence of two major state-owned holding companies (Eletrobras and Petrobras), by a wide network of state-owned electric utilities, and by substantial state planning of the sector. But with radical reform, this structure is rapidly changing.

The Ministry of Mining and Energy (MME), under the Secretary of Energy, is responsible for drafting national energy policy and monitoring and controlling water and energy resources. Two agencies are in charge of the two main subsectors, electricity and hydrocarbons.

The National Electricity Agency (ANEEL), directly or through authorization, concession or license, deals with the exploitation of electric potentials and sets the tariff structure. Centrais Elétricas Brasileiras S.A. (Eletrobrás )—a state-owned holding company that controls four regional companies, two distributors and is minority shareholder in the companies of several states—coordinates the planning for expanding the operations of electricity systems. Eletrobrás is also involved in financing and channeling funds for the development of the subsector.

The publicly-owned electric utilities of the various states, which have been broken-down into generation and distribution companies, are being privatized, thus increasing the number of actors involved in the Brazilian institutional structure. The opening of the hydrocarbons sector to private participation and the construction of large gas pipeline networks have also brought new agents to the sector.

The National Oil Agency (ANP), established in 1997 in the framework of deregulation of the hydrocarbons sector, is the agency that regulates and monitors the operations of the sector. It grants concessions for exploration and exploitation of oil and natural gas to Petrobras, private companies, or joint ventures.

Petrobras, a state holding company, participates in all the stages of oil and gas production and marketing, although it is no longer a monopoly and at present pursues a strategy of broad alliances with national and foreign private companies.

The National Bank for Economic and Social Development (BNDES), the state-owned development bank, invests in energy sector enterprises. It has also financed transnational corporations that have been awarded privatization contracts in the energy sector, such as the buyers of the power distributors Metropolitana and Bandeirantes of Sao Paulo.

Energy sources in Brazil

Between 1980-1995, total energy consumption in Brazil grew 43%, while per-capita consumption increased by 6%.

The main energy source is hydroelectricity (36%). Consumption of hydro-power has nearly doubled in the past 15 years. In 1991, 74.2% of households were electrified, but 4.35 million houses were without electricity and another 4.84 million were connected to the grid illegally, with the implied safety risks. Despite its dynamic growth, most of Brazil's hydroelectric potential remains unexploited.

Oil and derivatives is the second main energy source in Brazil (32%), but one of the least dynamic. Brazil reduced its dependence on foreign oil from 80% (50.5 million m3 imported in 1980) to 43% (29.2 million m3 in 1995). This was due in part to an increase in national oil production, mainly from off-shore exploitation in Cuenca de Campos, Rio de Janeiro, and partly from an increase in refining capacity.

Natural gas accounts for a small proportion of Brazilian energy (slightly over 2%). Natural gas consumption has experienced the largest growth and is expected to make up 10% of the country's energy mix in a few years. There are several projects—some under way—for pipelines to carry Bolivian and Argentinean natural gas to Brazil. The current strategy is to use natural gas for thermoelectric generation. Apart from the argument that gas is supposedly a "clean" fuel, the main purpose is to attract private capital investment in power generation by offering shorter amortization terms than those of hydroelectric plants. The low price of fuel oil, however, poses severe limitations on a natural gas substitution policy.

Fuelwood accounts for 12% of Brazil's energy supply. The contribution of fuelwood is dropping mainly because of a decrease in residential consumption.

Sugar cane became an important energy source through the Alcohol National Program (PROALCOOL), launched in 1975 in an attempt to reduce dependence on oil imports for transport. Public funds amounting to US$4 billion were invested, with the aim of increasing ethyl alcohol production, which is currently around 11,000-12,000 million liters/year. Most farmers in Sao Paulo substituted sugar cane for other crops. When the international price of sugar rises, however, producers turn to foreign markets, which, in turn, leads to import of sugar cane to avoid shortages in fuel production. Nearly 33% of Brazilian vehicles (around 4.5 million) use alcohol as fuel.

The use of non-conventional energy sources (solar, wind, biomass) is not significant. The Brazilian nuclear program has not yet resulted in power generation.

The new regulatory frameworks

The regulatory frameworks of the electricity and hydrocarbons sectors are dramatically changing in Brazil. The model in the electricity sector used to be that of regional monopoly with captive markets, vertically integrated companies, federal and state centralization and a cooperative process among the actors of the sector. The traits of the new model are competitive generation and distribution, de-verticalization—ie, transmission and distribution functions separated into independent enterprises—private capital participation (with the subsequent increase of actors in the sector) and coexistence of captive and free markets.

The general guidelines for the new electricity model as established by law are:

* competition in electricity generation;
* free access by any agent to transmission grids or transportation networks;
* free option for large consumers to choose their power supplier;
* introduction of the legal entity of Independent Power Producer (IPP);
* need for one simple "agreement" or one agreement between transmission actors.

The ongoing privatization process of regional and state enterprises and of those of the various Brazilian states covers only generation and distribution, while transmission remains public property. The new framework aims at creating competitive conditions in the power sector through the participation of an increasing number of private agents. The IPPs are expected to transform the sector by exerting legitimate pressure on the present monopolies.

In the hydrocarbons sector, the oil and natural gas markets were deregulated and opened to private investment, which put an end to Petrobras monopoly. Private capital may now participate in every stage of the energy sector.

Regulation functions, including decisions about concessions for exploration and exploitation of oil basins, were delegated to the National Oil Agency. Petrobras was not privatized because of its significance in the national economy. Its operations amount to nearly 2% of the Brazilian GDP. With its operations as a conglomerate and as a purchaser of goods and services in the domestic market, this figure would rise to 25%. Petrobras assets exceed US$50 billion. In 1995, Petrobras yielded US$6.516 billion in taxes.

The new legal framework entitles Petrobras to undertake joint ventures with the private sector, either as a majority or minority partner, and to sell assets of such associations without previous consent from the Brazilian Congress. Foreign companies seek association with Petrobras because of its 40 years of experience as the only oil and gas explorer and producer in Brazil, and because it is a recognized leader in deep water technology, which is necessary the exploitation of the country's crude oil reserves in marine areas. Petrobras plans to invest US$5 billion in the near future in oil and derivatives exploitation and distribution, in association with 37 foreign companies, including Exxon, Shell, Mobil, British Hydrocarbons, Amerada Hess, Elf and YPF.

Energy policy. Energy sources

Evolution of Brazilian energy production and consumption in the last 15 years has not been the result of an integrated energy policy. There were a series of plans and programs—all basically sectorial—open to input from private interests but excluding public users.

One of those sectorial programs was Proalcool (National Alcohol Program), aimed at the substitution of fossil fuels, which required huge state resources and rendered massive bad debts from the Program's target producers. At present, subsidized ethanol production, which supplies fuel for 30% of Brazilian cars, remains stationary at around 11,000-12.000 million liters a year.

The present policy aims to:

• increase the power generation capacity (using the abundant hydroelectric resources available and progressively intensifying the participation of conventional thermal power generation through thermoelectric plants running on natural gas or coal), interconnect the north/northeast and south/southeast/midwest electric systems, and establish the Brazil-Argentina interconnection for power importation;
• decisively incorporate natural gas (from Bolivia and Argentina) into the Brazilian energy matrix;
• develop the existing mineral coal reserves in the south of Brazil;
• develop the capacity of oil production within the country and abroad;
• slow the pace of the nuclear program.

In Brazil, surrounded by Venezuela, Argentina, Peru and Bolivia, all with large natural gas reserves, gas provides barely 2.5% of energy consumed. Brazil's decision to increase the country's dependence on imported gas has boosted work related to gas import. In ten years, natural gas is expected to account for 12% of the Brazilian energy matrix.

Several pipelines have been designed to transport natural gas to Brazil. Once the necessary thermal plants have been installed, gas will provide electricity to the industries of Sao Paulo, Porto Alegre, Florianopolis and Curitiba.

Starting in December 1998 for a 10-year period, one pipeline will transport eight million cubic meters of gas a day from the Bolivian city of Santa Cruz de la Sierra to the state capital Sao Paulo. By the end of 1999, the works will have reached Porto Alegre and the volume increased to 30 million cubic meters/day. Petrobras, US Tenecco, Australian BHP, UK British Gas, Bolivian YPFB and US Enron are involved in this project.

Another pipeline, with the route already designated, will transport 12 million cubic meters of natural gas/day from the Argentinean province of Entre Rios to the Brazilian border. This line will supply a vast area of the Brazilian state of Rio Grande do Sul from a thermal station to be built by the US company AES in the Brazilian city of Uruguayana. This project is being implemented by Transportadora de Gas del Norte (TGN), YPF, Petrobras, Eletrobras and CEEE, the last being a state-owned regional enterprise of Rio Grande do Sul.

Other projects include a 15 million cubic meters/day Buenos Aires-Montevidio-Porto Alegre pipeline belonging to British Gas and Pan American (a joint venture between Argentinean Bridas and American Amoco), and Trans-Iguazu, a 35 million cubic meters/day pipeline (plus a by-pass to meet Paraguay demand) involving companies from southeastern Brazil and Argentinean producers.

Natural gas is promoted as a promising fuel with guaranteed availability and environmental advantages. The main reason it is favored, however, is its lower comparative costs with respect to other sources.

At least in the short run, barriers exist for the absorption of additional supplies of natural gas. Construction of gas-fired thermoelectric plants (key elements for gas consumption) has been delayed and industries are just starting to convert to natural gas burning equipment. Of over 20 projects for gas-fueled thermal plants (eleven along the Bolivia-Brazil pipeline), very few have actually been implemented. Uncertainty about the profitability of thermoelectric plants seems to be causing the delays: during rainy season, hydroelectric power is cheaper than gas-generated power.

Brazilian natural gas sources
(million ms3/day)

* Projected starting in December
** Includes a project between Petrobras and YPF, and between British Gas and Pan American.
*** Includes production in northeastern Argentina.

Source: Gazeta Mercantil Latinoamericana, based on Petrobras and the market.

Enterprise and market restructure

The most significant restructuring is taking place in the power sector. Generation and distribution are being privatized, while transmission is kept as a natural monopoly.

Thirteen power distributors have already been privatized: Escelsa (Espiritu Santo), Light (Rio de Janeiro), Cerj, Coelba (Bahia), Centro-Oeste, Norte-Nordeste, CPFL (Sao Paulo), Enersul (Matto Grosso), Cemat, Energipe (Sergipe), Cosern, Coelce (Ceara), Bandeirantes and Metropolitana (Sao Paulo).

In generation, Gerasul (South of Brazil) has already been privatized, and the privatization of Furnas, Chesf, Eletronorte and Cesp (Sao Paulo) was scheduled for 1999. Included in the privatization plan are 49 hydroelectric plants and 22 thermal plants accounting for 63.7% of the country's total generation.

Some of the companies targeted for privatization are very profitable. Furnas, for example, earned US$360 million in 1997. According to Dennis Jungerman, Vice President of the mergers and acquisitions division at JP Morgan, a major advantage of privatizing Brazilian generators is their high efficiency level. "In terms of operation, organization and staff technical quality, generation plants are in excellent condition. The problem with some of them is that they are heavily indebted" (El Cronista, 8/31/1998).

The state-owned National Bank for Economic and Social Development (BNDES) finances 50% of electric sector privatization with foreign resources. This means that the state borrows money in order to loan it to the buyers—mainly large multinational corporations, thus increasing the country's already high foreign debt, at least in the short term. Privatization of Sao Paulo's two distribution utilities (Metropolitana and Bandeirantes) required a loan of approx. US$1.333 billion.

Eletrobras and BNDES, with foreign consultants and WB assistance, have developed "rationalization" programs for the distribution utilities, which means a significant job reduction in these companies. The process of privatization of various individual power generation plants has also been started.

In the case of oil, the market was de-monopolized, opening spaces for private-sector participation at all stages and for joint ventures with Petrobras. For natural gas, the Brazilian Congress agreed to make the state monopoly more flexible, allowing local states to grant service concessions to private companies. At present, eleven gas distributors operate in the various Brazilian states and four others will soon sign contracts to supply to Petrobras. The table below shows the current model of the gas industry in Brazil.

The gas industry in Brazil: An outgoing model

*State or private
Source: Gazeta Mercantil

Investment financing, prices and tariffs

Energy policy in the last decades, influenced by strong sectorial pressures, brought about transfers of profits between regions, economic sectors and population sectors through tariff privileges and subsidies. The energy sector lost capital to the benefit of other sectors. This, in turn, increased the fiscal deficit, since the national treasury frequently had to pay for the costs not covered by tariffs, or provide assistance to programs such as Proalcool through loans that were not repaid.

It may properly be said that a "process of privatization of the state" is taking place. The political and economic importance of the financial groups—including construction companies, manufacturers of goods and equipment, and service companies that provide everything from consultants to third party mediation—is the most striking aspect of this entanglement of interests which often entails swindling, over-invoicing, and corruption.

Big consumers, in turn, are being subsidized. The result is expressed by the declining participation of big consumers in power enterprise billing (eg, billing for high-voltage connections decreased from 44.3% in 1992 to 40.3% in 1995). Subsidies to some productive sectors have also been granted in the form of tariff privileges as export incentives.

Hydrocarbon-producing regions base their subsistence on oil (or gas) profits. Their respective municipalities fully depend on taxation of oil operations.

Efficient use of energy

The National Program for Electricity Conservation (PROCEL) was launched as the result of studies carried out by a work group that analyzed electricity conservation in Brazil (1982). The outcome of the studies was a joint action of the former Ministries of Mining and Energy and of Industry and Trade. They produced an inter-ministerial memorandum dated December 30, 1985, which officially established PROCEL as the first systematic effort to promote the rational use of electric power.

>From that date onwards, PROCEL has developed a range of activities. It has provided better analysis of basic consumer market characteristics and identified wasteful end-use habits in the electricity sector. Its work has been useful in defining the necessary steps for efficiency upgrades of electrical technologies. PROCEL develops projects to promote waste reduction, and it develops improvements of equipment and processes relating to various end uses of electricity.

PROCEL has obtained direct and measurable economies above 1.2 TWh, with costs below US$6 per equivalent oil barrel, at costs of less than 20% of the cost of power system expansion. It has likewise accomplished some indirect and induced economies.

To meet its goals, PROCEL employs institutional, financial, managerial, promotional and other kinds of mechanisms to foster reduced electricity consumption in every sector and class of society. PROCEL developed important projects in the industrial sector, in particular, one on energy diagnosis that identified major energy losses and opportunities for improvement at several companies, to assess their energy conservation potential. In the area of waste elimination, the suggested steps are in general quite simple and cheap; basically they involve resizing of engines, equipment and productive process adjustment, changes in the motor-equipment coupling, electric installation upgrading, operational adjustment, improved management, etc.

Second in importance in the industrial sector is the project for energy optimization—a natural follow-up of diagnosis—in which the productive process is considered in depth. Some consumers, selected on a basis of energy diagnosis studies, offer great conservation potential.

To provide quantified goals and action guidelines, PROCEL sets efficiency targets per end use (lighting, refrigeration, air conditioning, engine systems, ovens) and per sector (industry, residences, services and public lighting), based on international experience and domestic assessments of existing average consumption, penetration of new technologies, These targets, amounting to a consumption reduction of 12% in a 25-year horizon, are incorporated in long-term planning for the power. By adding the small gains obtained in the electric system and from consumers, conservation will play a significant role in the power sector.

Plans have been made to introduce energy conservation as a normal premise of engineering so that it stops being, as it is today, an auxiliary activity, often detached from the planning, design, implementation and operation of the system.

Environmental and social impacts

Oil and natural gas producing areas are increasingly affected by the risks and environmental disruptions inherent in production and transport technologies. Considerable tracts of land have been lost in coastal and other territories, where touristic and historic sites now show characteristic signs such as fires or crude oil spillage.

North of Sao Paulo and in the northeastern coastal belt, and in every cane plantation and distillery/power plant run by Proalcool, people coexist for half of each year with burning cane fields and alcoholic emissions. The sugar-alcohol industry employs many women and children in harsh, unhealthy jobs with long working hours. Most of these laborers are hired by "gatos" (deceivers) by means of subterfuge, which makes it difficult to enforce labor legislation and improve salaries.

In coal producing areas, mainly in underground mines (Santa Catarina), occupational health hazards and risk are customary. In Bage, in the south of Brazil, evidence of air pollution and atmospheric acidity has given rise to claims also on the Uruguayan side of the border. In the southern state of Santa Catarina, the legacy of coal production can be measured in ten thousand hectares of lost, barren and perforated land, acidified rivers and underground water with high levels of heavy metal, and a persistent smell of hydrocarbons, coal tar and sulfurous gas in the air.

In places where wood is currently cut or collected to use for fuel or charcoal production, economic expansion is characterized by environmental violence. In some cases, trees are harvested for high quality timber or to clear land for plantations, and charcoal production is a secondary activity carried out by workers illegally hired by contractors and "gatos". There exist innumerable cases of entire families working in forced labor conditions, living huddled in forest belts and fenced land, at the mercy of the middlemen of large landowners and charcoal buyers. In other cases, such as the large eucalyptus plantations, this problem has been only partly solved by the establishment of agro-villages or small towns where everybody works for a single big company (like Carbonita, in Minas Gerais). In these cases, workers coexist with smoke, heat and combustion gases, and are exposed to the risks of falling trees and fire.

Hydroelectric dams have flooded over 30,000 km of land and forests and expelled or "forcibly displaced" around 200,000 riverside families, depriving them of material and cultural livelihoods. In their relationship with local people, the companies' prevailing strategy was that of accomplished facts. Compensations for displacement were negligible or non-existent, and the resettlement process—if there was one—did not ensure the preservation of former living conditions.

Health problems, such as an increase of endemic ailments, have arisen in dam areas, and water quality is worsening with the subsequent damage to fishing and agricultural activities. Increased risk of downstream flooding has jeopardized local people's safety. Large areas of arable soil have been flooded and, in several cases, the biodiversity loss is irreversible. Problems generated by hydroelectric expansion have led to the creation of several social movements, such as the National Movement of Victims of Dams.

These processes have coexisted with social exclusion. In 1991 there were 4.35 million non-electrified homes and 4.84 million homes that accessed electricity through illegal connections or, in some cases, as self-producers, using car batteries and diesel generators.

Both the power sector and Petrobras have made cuts in their staff. This means a higher proportion of labor contracted out, generally under worse work and payment conditions than regular personnel. Other energy sectors, such as coal, were also affected by staff cuts.

Efficiency improvement and non-conventional energy sources

Non-conventional energy sources

In Brazil, energy production from non-conventional sources (solar, wind, biomass) based largely on available resources is an alternative for people living in isolated communities or in poor areas throughout the country. Its present development, however, is of little significance.

* Solar energy

Some studies have demonstrated that, depending on distance from the grid, number of residences to be served and load to be supplied, generation from photovoltaic cells seems to be more cost effective than grid extension. But profitability of such investment is uncertain given the poor conditions of target populations. Therefore, photovoltaic dissemination to this target group can only be accomplished through charity from the public utilities and international assistance.

It is estimated that Brazil can develop a power capacity of 50 MW in photovoltaic generation and three million square meters of thermo-solar capture.

* Wind energy

There are two outstanding examples of wind generation. One is a 75 kW air-generator installed by CELPE/UFPE in Fernando de Noronha; the other is a set of four 250 kW air-generators connected to the network, installed by CEMIG on Carmelinho hill in the state of Minas Gerais. Brazil's potential for wind power is estimated at 1,000 MW.

The electric utility Idaho Power Company, with 17 hydroelectric and four thermoelectric units in the state of Idaho (USA), will open a Brazilian subsidiary to install mixed solar-wind power facilities in isolated places that are currently serviced by thermoelectric units based on gas oil. The company relies on the latest technology in renewable energy generation systems for localities far from the distribution networks.

* Biomass

The 1973 oil crisis fostered studies of biomass energy resources, including: ethanol made from amylaceous and cellulose materials, methanol from wood, vegetable oils, organic and industrial wastes. Despite their high estimated potential, the projects did not attract investors and were dismissed because of their low profitability after the "oil shock".

The main project for power generation from biomass in Brazil is BIG-GT (Biomass Integrated Gasifier-Gas Turbine), developed by a consortium including Chesf, Eletrobras, Cientec, Vale do Rio Doce, Shell and the Ministry of Science and Technology, with World Bank assistance.

The "Action Plan for the Development of Renewable Solar, Wind and Biomass Energy in Brazil", designed by the Renewable Energies Forum that met in Brazil in 1995, set the following goals for 2005:

- 3000 MW power capacity in co-generation from sugar cane waste pulp;
- 1000 MW power capacity in co-generation from wastes of the paper industry;
- 250 MW power capacity in thermoelectric units running on fuelwood from tree plantations;
- 150 MW power capacity in small-scale power generation systems fueled on vegetable oils;
- 12 million tons charcoal/year; being the whole growth referenced to present production (around 10 million tons/year) obtained by sustainable means;
- 18,000 million liters/year of ethyl alcohol for fuel purposes;
- 20 million liters/year of fuel vegetable oils;
- 80,000 m3 bio-gas obtained from urban, industrial and rural wastes;
- 3 million additional hectares reforested with native and exotic species.

In addition, four priority programs for biomass energy development in Brazil were established for 1997-2000:

a. Sustainable development in Amazonia based on biomass resources
Given the importance of the Amazon region for the biological and climatic balance of the planet, it being the most exuberant biomass area of Brazil, and in view of scientific disregard for biodiversity and forest conservation, the goal is to encourage integrated production of non-wood biomass and sustainable forest management.

b. Development of multi-use tree plantations
The goal is to establish three-party (government, financial system and biomass industry/user) credit facilities for a vast program of reforestation and recovery of degraded areas, starting with forest modules on small and medium-sized rural farms, with an aim to:

- reforest 600,000 hectares in rural and urban areas, ensuring that 20% of the total area to be reforested (120,000 hectares) is on small and medium-sized rural farms;
- establish 200 communal tree nurseries.

c. Regional uses of biomass energy for transport as a complement or replacement of oil derivatives
The objective is to foster national production of renewable fuels for individual and collective transport of cargo and passengers with Otto and Diesel cycle motors, by means of:

- increasing fuel alcohol production by 20-25% in the next four years, from a current 13,000 million liters/year to 16,000 million liters/year, and fostering the technological development of Otto cycle motors with an aim to increase the proportion of anhydrous alcohol in gasoline;
- producing five million liters per year of vegetable oil fuel, upgrading the yield of thermochemical production processes of "vegetable diesel" and fostering the technological development of diesel cycle motors to make the use of vegetable oil, especially dênde (oil palm) oil, feasible.

d. Integrated, sustainable systems for the production of energy, food and raw materials
Sustainable development of biomass resources will be encouraged by implementing demonstration projects that integrate agriculture, forestry and extractive production systems and fostering projects that integrate energy, food and raw material production. These programs should reassess the value the waste from rural activities and promote technological development in power generation, especially with reference to waste from sugar cane production and the paper and pulp industry, by the following means:

- the installation of 300 MW power co-generation from sugar cane waste;
- the installation of 100 MW power co-generation in the pulp and paper industry;
- the installation of 15 MW power generation from multi-fuel generator groups fueled on vegetable oil.

Energy efficiency

The Action Plan of PROCEL/GCOI/CCON for 1997-1998 establishes the following guidelines for achieving energy efficiency :

a. low-voltage demand management, by installing two million devices to limit demand;
b. public lighting efficiency improvement;
c. replacement of inefficient lamps (eight million lamps);
d. promotion of high-yield motors through market dissemination of 150,000 high-yield motors;
e. refrigeration efficiency improvement by introducing 1.2 million refrigerators in the market;
f. power waste reduction on public premises by enhancing efficiency at 2,000 public premises.

The expected outcome is:

The above results would require financial resources estimated at US$800 million.

The energy sector and the Multilateral Development Banks

Lack of investment in transport and the energy infrastructure in recent years increased the cost of production and jeopardized the success of Brazil's industrial modernization strategy. For this reason, the World Bank proposed a joint analysis of the various alternatives to the Brazilian authorities, to ensure the financial feasibility not only of individual projects but also of global sectors.

The Bank is offering to assist reforms that improve the institutional, legal and political structures in the productive sectors, by strengthening tariff and regulatory legislation and setting forth transparent rules to ensure autonomy for private sector operations in both the physical and energy infrastructures. Examples are adjustment of power tariffs to real costs, creation of less monopolistic conditions, and decentralization.

According to the "Brazil Country Paper" published by the Inter American Development Bank (October 5th, 1995), approximately 18 power projects are on stand-by—at different stages of planning and construction—because funds are lacking. This jeopardizes the government strategy for modernization of the productive-sector, including the feasibility of energy rationalization.

On account of the above, the World Bank strategy in the electricity subsector also includes:

a) institutional strengthening, including the creation of new agencies and reform of existing agencies, to improve positive features vital to long-term planning, such as engineering, construction and operation of complex systems, etc.

b) improvement of public services; better policies for staff and financial management; and development of better technologies for energy generation, transportation and marketing.

c) projects that contribute to specific priorities, such as energy conservation, loss reduction, diversification of the energy matrix, privatization, stronger private sector involvement in resource mobilization and operation of concessions; and efforts to reduce (import) prices through financial resources.

At present, 37 projects are being implemented (and 22 are projected for future consideration) with World Bank assistance, with investments totaling US$6.1 billion for the period 1995-97. Of this amount, only US$30.5 million was earmarked for the energy sector, for projects such as the Brazil-Bolivia pipeline; a pilot biomass project in northeastern Brazil; the energy efficiency project; the hydrocarbon transport project; the gas sector development project; and the Segredo Hydroelectric Project of Compañía Paranaense de Energía (CEPEL).

The World Bank is also offering assistance to several power utilities and to some small and medium-size industries through BNDES loans. The IDB, in turn, is contributing to the financing of some private projects, such as AES.

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