Brazil fuel hike to 'weigh' on power prices

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Friday, November 7, 2014

The price of electric power in Brazil is likely to rise as a result of higher fuel costs, the head of national grid operator ONS said on Friday.

The forecast came after state-run oil firm Petrobras announced a 3% price hike for gasoline and a 5% rise for diesel.

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"It's going to weigh [on the price], but only a little because we don't have many thermal plants that are fueled by diesel," ONS director general Hermes Chipp told state news service Agência Brasil.

Brazilian power prices have already increased sharply this year as drought cripples output from hydroelectric dams.

The generation shortfall has forced the government to activate backup thermoelectric plants, whose wholesale prices are up to six times higher than hydropower.

According to ONS, Brazil's reserve thermoelectric plants currently contribute 3GW – or 15% of overall supply – to the national grid.

BNamericas will host its 11th Southern Cone Energy Summit in Lima, Peru, on November 12-13. Click here to download the agenda.