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Breakingviews: Brazil blackout?

Tuesday, August 19, 2014 - 03:10

Richard Beales and Christopher Swann discuss why price curbs on electricity imposed two years ago by President Dilma Rousseff are coming back to haunt Brazil.

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So the Brazilian government meddling in the energy sector doesn't end with Petrobras. There's also military brass the big electric utility which has lost a lot more upset upset about it and address of the last couple -- Chris what happened and then what's happening now -- the chickens are coming in to resist that. Will electricity prices have been a big problem in Brazil for very long time with super -- -- right through -- -- among the world's highest I think any. It's in Slovakia has high electricity prices and low of just massive train on industry. Right crippled the Panamanian sect or via Lehman sect to defend you with -- American -- But an idol success a lot of money so what is that delivers that the president tried it yet it that well. And we are trying to think she could've done what she changed to do is believed to private sect it -- -- at least companies including states that on tristate right month. Into reducing rates. -- as pilot to rest at. Was -- -- -- to companies exactly industrial uses but still has to get the from them yet which is that which is the problem in Michael that that the problem is it that they created a lot of fragility. And that electric brass. When a drought hit now present is very dependent on hydroelectric -- They haven't Trout. And and companies found thousands tropical -- position of being forced to file to the public and industry had to -- -- price. And and go out because there was a shortage of supply get out into the market by. Electricity at very gratifying it is essentially free at least -- operating bases but yet that there isn't out of fort yes he. Yeah and there's not not much to buy and say. This is schools huge losses at some of these companies in an amendment that these Brazilian government through one way or not about it. By brokering deals had time -- allowed the industry but some favorites and loans and -- to help people pay for the public is evenly -- so for as much as that into effect yet so it bit them and that's not sustainable right there one that what happens next well. What -- could have been done was to ration electricity now part of the reason they didn't want to do that is via apps that you. All full political position just had a -- papers. Elections for reasons and it's well and not to mention the World Cup in six and yet all the publicity because -- yeah area. And and that is -- -- -- in 2000 among one effect create assesses that record shows that read it proved to be horrible things to me. This is not doing that and they that would make sense because you can actually if the water levels standard down I think my sense if you ration. And it prevents you from having. Over the long. Well she needs to allow the company's -- rat race -- of the list is the rocket play all right it's either yes and you the rational yet -- yet over yet you want to keep bailing them out nicely written for state hadn't banks. You let them raise prices when you -- probably some combination of three. Okay well we'll leave that could that -- they were great set of choices that -- that. A -- breaking news views.

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Breakingviews: Brazil blackout?

Tuesday, August 19, 2014 - 03:10