Powering Up the Source

Aug 30, 2003

Ensuring that Brazilians have an adequate supply of electricity is one of the government's major challenges. But outside investment remains limited.

Anyone who has ever visited the immense Itaipú hydroelectric plant on the Paraná River that divides Brazil and Paraguay would be astonished to think that crippling power shortages could undermine Brazil's growth prospects. This dam is so large and the lake behind so vast that it is often described as one of the seven wonders of the modern world. Itaipú is the largest dam of its kind in operation anywhere in the world. Its 18 generating units can generate 12,600 megawatts and provide over one-fifth of Brazil's power supply and nearly all the electricity consumed in Paraguay.

Nonetheless, Brazil needs to invest about $82 billion in its electric system through 2020 to keep supply and demand in line. The country needs to increase generating capacity by 85,000 MW - the equivalent of seven new Itaipú dams - and lay 35,000 kilometers of transmission lines. Traditional sources of finance such as the BNDES development bank, international...

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