BRASILIA, July 29 Brazilian power regulator
Aneel said on Tuesday it extended by nearly one month a deadline
that the country's electricity distributors have to pay for
spot-market power purchased in May.
Aneel said it extended the deadline to Aug. 28 from July 31
to allow the government more time to negotiate emergency loans
for the distributors to help them pay for the soaring
spot-market power prices.
Prices for power on Brazil's spot market have jumped in
recent months due to a drought that reduced the availability of
power from hydroelectric plants. The national power system was
forced instead to use of higher-cost electricity from
thermal-electric plants that burn natural gas and other
Distributors though, are unable to quickly pass on the
higher costs to consumers since they can only adjust their rates
annually while payments to generators are due every 60 days.
The result has been to slash distributors' cash flow,
threatening them with default and Brazil's government with the
need intervene financially to uphold the stability of the
country's electrical system.
The deadline will allow the government more time to arrange
6.5 billion reais ($2.92 billion) from a group of financial
institutions led by state-owned development bank BNDES
. Reuters reported last week that the original June 11
deadline, which had already been extended to July 31, would
likely be extended again.
The loan's negotiation is expected to be complete before the
new deadline and if that happens, payments could be made before
the Aug. 28 cut-off, said Romeu Rufino, Aneel's
The distributors make their spot-power payments to
generators via the CCEE clearinghouse, which is also the
organization that will receive the loan and use it to pay for
the power. After distributors rates are adjusted to account for
the new costs, including interest on the emergency loan, the
CCEE will direct some of the cash to pay down the debt.
A previous 11.2-billion-real emergency loan arranged earlier
this year for the same purpose was exhausted in May.
($1 = 2.223 Brazilian reais)
(Reporting by Leonardo Goy in Brasilia and Ana Flavia Rochas in
Sao Paulo; Writing by Jeb Blount in Rio de Janeiro Editing by W