"Expert" continues to predict blackouts

247 - Classified by the mainstream press as one of the leading energy experts, Adriano Pires, from the Brazilian Infrastructure Center, continues to bet on the worst. He predicts that the blackouts – previously predicted for the beginning of this year – will occur in the near future. Read below:

On the horizon, blackouts - ADRIANO PIRES

During the ten years of the PT (Workers' Party) government, energy policy can be divided into two periods. The first lasted until the 2008 global economic crisis and was characterized by incentives for new investments and a concern for guaranteeing supply. In the oil sector, the government maintained the regulatory framework, continuing oil auctions, and the price gap between gasoline and diesel, being small, had little impact on Petrobras's finances. Biofuels experienced their best period during this time.

Everyone remembers that President Lula announced to the four corners of the world that Brazil would be the green Saudi Arabia. It was during this period that the government launched the Biodiesel Program, and investments, production, and consumption of ethanol hit record highs. For biodiesel, the government set a target of 5% blending with diesel, thus providing predictability, which led to the construction of several production units. Regarding ethanol, the gasoline pricing policy allowed for its competitiveness, leading government authorities to state that gasoline in Brazil would become the alternative fuel.

In the electricity sector, the government, concerned with avoiding further rationing, cleverly promoted energy supply auctions for the regulated market while maintaining the free market. The auction rules favored thermal power plants, within the idea of ​​guaranteeing supply. During this period, the government believed that the best way to increase the supply of electricity would be through competition.

With the arrival of the economic crisis and the announcement of the pre-salt discovery, Brazilian energy policy changed course. The new course will be characterized by greater state intervention and price populism. The first sector to fall victim to the new energy policy was the oil sector. The pre-salt discovery was the alibi that the radical nationalists of the PT (Workers' Party) needed to close the oil market in the country. Since 2008, no more auctions have been held, and a new regulatory framework has been approved, giving preferential treatment to Petrobras. At the same time, the government, trying to prevent the economic crisis from causing greater impacts on the country, encouraged the sale of automobiles.

One of the policies adopted to increase car sales was freezing gasoline prices. This price freeze encouraged growth in gasoline consumption and imports, severely damaging Petrobras' finances. In other words, the government gave the company more responsibilities and removed its right to freely set its product prices. During this period, biofuels experienced and continue to experience a difficult time. The "green Saudi Arabia" project is dead. There is no longer a regulatory framework; with the gasoline price freeze, ethanol has completely lost its competitiveness, leading to the bankruptcy of numerous plants, and biodiesel has enormous idle capacity and no predictability regarding the blending percentage.

In the electricity sector, the government abandoned its concern for guaranteeing supply and adopted a policy dedicated exclusively to affordability, or rather, tariff populism. The climax of this policy was the publication last year of Provisional Measure 579, which ignored the need for new investments and promoted a subsidy in tariffs at a time of energy scarcity.

The energy shortage, caused by lack of rain, has forced the government to activate gas, coal, and oil-fired power plants, all of which are more expensive than hydroelectric plants. This is expected to negate most of the energy reduction, especially in the industrial sector. And what's worse, it will likely force the government to adopt more convoluted solutions, completely detached from market logic, to preserve the artificiality of the price reductions mandated by law.

Current energy policy confuses cheap energy with competitive energy, and in the short term this has destroyed Petrobras and Eletrobras, and in the long term will promote blackouts.