RIO DE JANEIRO, Oct 1 (Reuters) - Brazil’s electrical utilities have lost their financial independence and are dependent on the Brazilian Treasury to keep operating, the head of the country’s chief federal audit court told reporters in Brasilia on Wednesday.
In the face of a drought, rising demand for power and delays in building new power plants and transmission lines, the costs of generating power in Brazil have soared, forcing the government to arrange more than $13 billion in emergency loans for the electricity sector to stave off bankruptcies.
Hydroelectric dam operators have been forced to buy expensive replacement power to fulfill contracts with distributors after water levels fell too low for generation. The power was then sold at a loss to the distributors.
Distributors, many of which have not had access to government-run auctions to obtain new power supplies needed to keep up with demand, have also had to buy power on the spot market. They often sell it at a loss because their regulated prices are only adjusted once a year.
With elections looming some state governments have not passed on the full increases in power costs to consumers. (Reporting by Leonardo Goy; Writing by Jeb Blount; Editing by Peter Galloway)